Novartis loses AAA ratings on Alcon deal

By Maya Thatcher

LONDON (Reuters) - Credit rating agencies Standard & Poor's and Fitch Ratings stripped Novartis (NOVN.VX: Quote, Profile, Research) of its triple-A ratings on Monday after the Swiss drugmaker announced it was buying a stake in U.S. company Alcon (ACL.N: Quote, Profile, Research) from Nestle

(NESN.VX: Quote, Profile, Research).

The downgrades can be seen as the end of an era: there are no European non-financial companies left with triple-A ratings from the two agencies.

The number of non-financial companies with top-notch triple-A ratings has dwindled in recent years as companies have become more confident about making use of debt to enhance shareholder returns.

S&P says it has just six such companies at the triple-A level globally; five in the United States and one in Asia.

S&P chopped Novartis's rating three notches to AA-, and said the outlook was now stable.

Fitch followed shortly after with a two-notch downgrade to AA, and placed the company's rating on stable outlook.

S&P said Novartis had shown a lack of commitment to its AAA rating in its plans to finance the acquisition of the 77 percent stake with debt, significantly increasing its leverage.