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Fitch Downgrades Bayer (expected)

HEALTHCARE

Fitch downgrade puts it on par with S&P/Moody's. Like S&P, Fitch has left it on outlook Stable. Moody's key one to watch/lowest rated preceding the large lawsuit loss this year. We see it staying unch on Baa2 Neg.

  • Fitch has assumed Bayer's full provisioned €5.7b to be used for Roundup lawsuits to 2027 (as reminder S&P earlier this week assumed €1.5-2b/yr for near term).
  • It also flags legacy PCB lawsuits (see here; https://www.bayer.com/en/resolving-us-pcb-litigation) as a risk given not provisioned for.
  • Emphasises downward rating risk on litigation costs that come higher than provisions - nothing new there - markets prices Bayer wide (~by 1 rating) for same reason.
  • Its also assumed no buybacks (till 2027), dividends to remain at current minimums (till 2026) & net annual acquisitions of €3.2b. . On acquisitions we assume Fitch means over entire period despite unclear wording.
€ cash lines are 1-3 tighter, in line with broader index,.
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