Bayer Rallies on Dividend Cut

Index heavyweight, Bayer {BAYN GY Equity} (Snr; Baa2 Neg, BBB Pos), is posting a strong rally - 8-10bps across the curve - after yesterday dividend cut announcement (to 11c, 2% pay-out ratio, ~€2.25b/yr cash saving).

The dividend cut may be little support if it faces continuing unfavorable lawsuit decisions - -last rating action was from Moody's (to negative outlook post Asundexian failure & $1.5b loss/payout) when it flagged Bayer had €7b in remaining provisions (as at Sept 2023) of the total €16b. Since then its faced a $2.25b pay-out verdict against it. No rating action since but markets are still pricing at least ~1-notch downgrade - it has traded in line (& wider) to Viatris (Baa3 Stable, BBB- Neg, BBB) - both of which trade wide to broader index.