Summary
This 8-K filing from Schering-Plough Corporation (Note: the prompt mistakenly identified Merck & Co., Inc. as the filer) reports on credit rating actions taken by Moody's Investors Service on July 14, 2004. Moody's significantly downgraded the company's senior unsecured notes and various shelf registrations, while reaffirming its commercial paper ratings. The outlook for Schering-Plough's ratings was indicated as negative, signaling potential future challenges. Furthermore, the filing details the impact of this downgrade on the company's existing long-term debt. Specifically, the interest rates on $1.25 billion of 5.3% senior unsecured notes due 2013 and $1.15 billion of 6.5% senior unsecured notes due 2033 will increase by 25 basis points, effective December 1, 2004. This increase will result in an approximate additional annual interest expense of $6 million for Schering-Plough.
Key Highlights
- 1Moody's Investors Service downgraded Schering-Plough Corporation's senior unsecured notes to Baa1 from A3.
- 2Various senior unsecured and subordinated shelf registrations were also downgraded by Moody's.
- 3The credit ratings outlook for Schering-Plough was assessed as negative.
- 4Commercial paper ratings for Schering-Plough and its subsidiary Schering Corporation were reaffirmed at Prime-2.
- 5A downgrade in credit ratings triggers a 25 basis point increase in interest rates on existing senior unsecured notes.
- 6This interest rate increase will be effective from the December 1, 2004, interest period.
- 7The annual interest expense for Schering-Plough is expected to increase by approximately $6 million due to this rate adjustment.