EU HEALTHCARE: Healthcare: Week in Review

The sector was +0.9 bps wider with Baxter and some infrequent issuers underperforming.
• Abbott Labs agreed to acquire Exact Sciences for $21bn ($23bn EV). S&P placed ABT on Watch Negative. Moody’s held the company at Aa3 Stable. Leverage will rise to ~3x on completion but Moody’s expects a quick deleveraging to ~2.5x which is threshold for a cut. In any case, we should see some financing for this deal.
• Pfizer funded the Metsera deal with $6bn in USD. PFE was the top performer in EUR on supply-relief.
• Merck KGaA agreed a $3bn AI Collaboration with Valo to investigate Parkinson’s. Interestingly, Valo issued a press-release, but Merck KGaA did not – this may imply that the payments are spread over many years. Merck did announce an AI High Performance Lenovo computer in Munich. MRKGR issued an €850m 30NC5.25 to tender the Call26.
• Danaher and Thermo Fisher were both upgraded to A2 by Moody’s.
• Fresenius Medical issued €500m 5yr. FMEGR last issued in April 18bps wide of secondary, but this issue was only +5 cheap. The secondary curve is well supported by retail due to the 1k denominations. The curve was 4bps wider on the week.
• Baxter issued $2bn in a debt management exercise; it’s first issuance since the downgrade.