Merck's Debt Ratings Fall on Vioxx® Concerns

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On January 27, 2005 Moody's Investor Service said it cut the long-term debt ratings of Merck & Co., citing cash flow and potential litigation costs related to Vioxx®.

Moody's cut Merck's senior unsecured rating to "Aa3," the fifth highest rating, from "Aa2." The outlook on the ratings is negative.

Merck's free cash flow will likely decline during the next several years right as the company faces potentially high legal costs related to Vioxx®.

Moody's said it held to a one-step ratings cut because Merck's liabilities are unlikely to exceed $10 billion over the next three years and the company has about $14 billion in cash and fixed-income investments as of September 30, 2004.

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