In 2011, the capital market showed high volatility particularly owing to the turmoil over the stability of the common European currency and the economic situation of several eurozone countries. This volatility was also reflected in the price development of Merck’s outstanding bonds.
After having issued a euro bond of € 3.2 billion in the course of the Millipore acquisition, the largest euro bond issue by a company in 2010, Merck did not make any new emissions in 2011. As the financing of the acquisition in 2010 led to a sharp rise in financial liabilities, it was announced in 2010 that the level of debt would be reduced again as quickly as possible. Merck successfully achieved this objective in 2011 on a net basis (when financial liabilities are offset against liquid assets). On a gross basis, however, only minor changes occurred as there were no maturities from the bond issue in 2011. The changes relate primarily to the convertible bond placed by Millipore in 2006. Merck took over this convertible bond within the scope of the acquisition. The majority of the investors in the convertible bond exercised a conversion right resulting from the acquisition in 2010. The still outstanding total nominal amount of US$ 27.2 million was repaid in the fourth quarter of 2011, which slightly reduced financial liabilities.
Neither Standard & Poor’s nor Moody’s adjusted their credit ratings for Merck in 2011. While Standard & Poor’s issued Merck a BBB+, Moody’s issued a Baa2 rating. Both agencies issued a stable outlook on this long-term rating.
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