Moody's Investors Service
on Tuesday reaffirmed its Aaa long-term credit rating for
, keeping the New York drugmaker at its highest designation.
The firm also assigned a rating of Aaa to an Ireland-based unit of the company,
Pfizer Investment Capital
, which recently sold $1 billion in notes.
The long-term ratings outlooks on Pfizer and Pfizer Investment Capital are negative. Both have Prime-1 ratings for their short-term obligations.
Moody's said the note offering should help Pfizer finance the repatriation of foreign-subsidiary earnings under a tax-holiday law signed by President Bush last year. Companies can repatriate these foreign earnings at a tax rate of 5.25% rather than the traditional 35%. Pfizer is repatriating nearly $37 billion.
Pfizer is one of only two drug and device companies receiving Moody's Aaa rating, with
Johnson & Johnson
being the other. J&J has a stable outlook.
Pfizer has a negative outlook "due to concerns that disappointing product sales, unfavorable outcomes of patent litigation, or a shift toward more aggressive acquisitions or share repurchases" may cause its financial ratios to fall below ranges Moody's has established for its top credit rating. The ratios include operating cash flow to total debt of 75%, free cash flow to total debt of 40% and adjusted cash and investments to total debt of 75%.
The company continues to enjoy the top credit rating, Moody's says, because it is "well positioned to maintain financial flexibility consistent with" the agency's guidelines, has "significant flexibility with respect to discretionary share repurchases" and has a "very strong new product pipeline."
The potential of Pfizer's drugs in late-stage clinical testing "is a key differentiating factor compared to most other rated pharmaceutical companies," Moody's says. The R&D pipeline "helps to offset concerns regarding Pfizer's high exposure to upcoming patent expirations."
Pfizer's stock was off 29 cents, or 1.3%, to $21.45.