Fitch Ratings downgraded German agrochemical and pharma giant Bayer AG's long- and short-term issuer default ratings by one notch to A-/F2.
The downgrade follows the company's final funding structure for its $62.5 billion deal to acquire U.S.-based Monsanto Co.
Bayer will issue nearly 75 million new shares to existing investors at €81 each to raise €6 billion, which will be used to help fund the acquisition, expected to close June 7. The German agrochemical giant also intends to issue senior bonds in U.S. dollars and euros, with an expected total volume of up to €20 billion.
The new rating is consistent with Bayer's enlarged scale and wider business diversification, as well as the more resilient nature of the group's crop science business compared with many peers in the chemicals industry, Fitch said.
The rating agency said Bayer's shift toward the life science industry will provide the company with sound organic growth opportunities.
Moody's and S&P Global Ratings also previously downgraded Bayer's debt ratings due to the Monsanto deal's financing structure.
