Independent rating agency Fitch downgraded Bayer’s long-term issuer default rank to BBB+ from the previous A-. Analysts of Fitch Ratings gave Germany’s large pharmaceutical company the negative outlook.

Besides, the rank of Monsanto, Bayer’s agrochemical subsidiary, was revised downwards to BBB+ from A- by the same criterion. Interestingly, Fitch does not rule out a further deterioration in the rating. The reputation of the biotechnological division was undermined in 2019. Experts are clashing over the application of a glyphosate-based herbicide in the agriculture and irrational use of excessive investment. Such risks could enlarge the company’s operating margin, Fitch analysis suppose.

The negative outlook reflects a high risk of considerable expenses under the lawsuit on glyphosate. Fitch analysts are ready to upgrade the outlook to stable only on condition that the legal proceedings end up with the positive ruling. However, Bayer’s credit rating will be unaffected by any court decision, Fitch made a comment.

Monsanto’s long-term rating at the BBB+ level confirms the company’s top-notch status in the market and the elaborated financial policy that requires its management to cap dividends by €12 billion in 2019 – 2022.