Reply #10: MERCK: Recall threatening AAA credit rating [View All]

[54anickel]

http://www.chicagotribune.com/business/chi-0410060128oct06,1,460740.story?coll=chi-business-hed

NEW YORK -- Merck & Co. may lose its 29-year-old AAA credit rating after withdrawing its Vioxx painkiller from the market, bond prices show.

The extra yield demanded by investors to own Merck's 4.375 percent notes maturing in 2013 rather than government debt widened 14 basis points, to 52 basis points, since the Sept. 30 recall, according to Merrill Lynch & Co. data. A basis point is .01 percent.

Vioxx, the world's second-best-selling painkiller, has a potential link to heart attacks and strokes, Merck said. The recall may cut Merck's annual cash flow by one-fifth, leaving less of a cushion to make debt payments.

Moody's Investors Service put Merck, one of 11 U.S. companies with top credit grades, on review for a possible reduction.