Moody’s Investors Service affirmed the ratings of Johnson & Johnson including the Aaa senior unsecured rating and the Prime-1 commercial paper rating.
These actions follow the announcement that J&J will acquire Actelion Ltd for approximately $30 billion in cash. The rating outlook is stable.
“The Actelion deal provides a new growth driver in pulmonary arterial hypertension and involves no initial debt, preserving J&J’s excellent credit profile,” stated Michael Levesque, Moody’s Senior Vice President.
J&J’s Aaa rating reflects the company’s large scale and market presence, and geographic diversity, and its strong profit margins.
Based on J&J’s long-held conservative financial policies, Moody’s expects continuation of robust credit metrics including debt/EBITDA at or around 1.25 times, while also maintaining high levels of cash.
The growth in the pharmaceutical business will decelerate with several patent expirations and the recent launch of a Remicade biosimilar, but the Actelion deal will help J&J maintain solid momentum in pharmaceuticals.
The rating outlook is stable, reflecting Moody’s expectations for solid operating performance and the benefits of excellent diversity. The stable outlook also reflects Moody’s expectation that J&J will manage conservative financial policies including high cash levels.