Credit rating agency Moody's warns over litigation liabilities

Bayer could absorb litigation costs of up to 5 billion euros (£4.3 billion) to settle ongoing lawsuits linked to its Monsanto weedkiller Roundup, credit rating agency Moody’s said on Tuesday, according to Reuters.

But if payouts reach 20 billion euros - a possible scenario according to analysts - the German pharmaceuticals company is in danger of losing its “Baa1” investment rating. Baa1 indicates a moderate credit risk in which the company is judged to have adequate capacity to meet its financial commitments, though changing circumstances can threaten that capacity.

Claimants in the litigation say that their cancer was caused by glyphosate, an ingredient in Roundup, and are demanding million-dollar compensation payments from Bayer.

The World Health Organization in 2015 classified glyphosate as “probably carcinogenic to humans”, but the US Environmental Protection Agency in September 2017 disagreed.

In the United States alone there are 11,200 lawsuits pending against Monsanto, which Bayer bought last year for $63 billion, and litigation setbacks have sent Bayer shares plunging in recent months.