Friday 18 April 2014

Moody's downgrades GlaxoSmithKline credit outlook

GSK said it 'thoroughly investigated' the whistleblower's allegations earlier this year
GSK said it 'thoroughly investigated' the whistleblower's allegations earlier this year

GlaxoSmithKline, already rocked by a bribery scandal in China, suffered a fresh setback today when Moody's Investors Service cut its credit outlook for the British drugmaker on concerns about cash outflows.

Moody's said the reduction in the long-term A1 rating to negative from stable was not triggered by the situation in China, where analysts believe GSK may face fines following allegations that up to 3 billion yuan ($489 million) was funnelled through travel agencies to facilitate bribes.

A company spokesman said GSK was "relaxed" about the move, which would not affect its ability to access capital markets.

GSK's CEO told Reuters in June that he had a low appetite for further acquisitions and divestments would far exceed the cost of buying businesses as the company slims down ready for a wave of its new medicines to reach the market.

Moody's said GSK's financial profile had been hurt by its debt-financed acquisition of Human Genome Sciences last year, as well as legal settlements linked to past investigations and its policy of continuing to make large share buybacks.


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