More evidence that the credit markets are forcing all sorts of contortions on deal-minded companies--such as Pfizer and Roche. The Wall Street Journal reports that both companies, which "once tapped the bond market at will," now have to worry about refinancing the short-term loans they'll need to finance their deals (Pfizer-Wyeth and Roche-Genentech, for anyone who's been on Mars for the past couple of weeks).
Both companies have negotiated bridge loans for those transactions, should they come to pass. But both are already working on bond offerings--and they may end up having to float bonds before they actually make their deals. And that would cost millions in interest.
Take Pfizer, the WSJ says. It needs $22.5 billion in long-term debt to replace its bridge loan. The additional expense for selling bonds in advance, just to make sure they sell, could be around $210 million. That's a big chunk of change that could fund lots of R&D or marketing. Stay tuned.
- read the WSJ piece