BOSTON SCIENTIFIC LIKELY DOWNGRADED, BUT STABLE OUTLOOK

Boston Scientific is likely to face a downgraded financial rating, but a stable long-term outlook from its likely acquisition of Guidant, Fitch Ratings reports.

Various indicators of financial health will be downgraded, included Boston Scientific's Issuer Default Rating (IDR), senior unsecured notes, unsecured bank credit facility and commercial paper ratings, the group said. The IDR will drop from "A" to "BBB," Fitch Ratings added.

The lower rating reflects the increased leverage resulting from the Guidant transaction, Fitch said. The reduced rating also reflects the limited visibility on the strength of Guidant's Cardiac Rhythm Management (CRM) business. Fitch is also concerned with potential product liability exposure Boston Scientific will face related to Guidant's CRM business, along with regulatory compliance concerns at both companies.

However, Fitch believes that Boston Scientific will have a stable long-term outlook, in part, because the company will be positioned as a leader in the worldwide drug-eluting stent (DES) market and the only participant with two DES platforms using two different drug families. Fitch also has "a high degree of confidence" in Boston Scientific's commitment to reduce debt, mostly because the company will be incentivized to do so.