20 March 2019 by jbchevrel
Bayer AG (BAYNGR) saw its 5y CDS (note that 5y now designates the June 2024, as opposed to the December 2023) widen by c25bp and its stock fall by c13%, after an overnight Monsanto-linked legal headwind. The San Francisco jury has ruled against BAYNGR, concluding that Roundup was a substantial factor in causing the plaintiff's cancer. This is not yet a finding of Bayer's liability. Liability and damages will now be decided in a 2nd trial phase beginning on Wednesday. This is the 2nd case for BAYNGR, having previously seen a Californian court award $289M against it, although this figure was later reduced to $78M on appeal. Dealers talk about a potential 1-notch downgrade across agencies. BAYNGR is currently BBB s/Baa1 n. The market wonders about the scope for a settlement tied to Glysophate trials. Settlements could in total exceed $5B. Some analysts believe that close to $20bn is priced in the shares, at this level. The series is poised to continue, as a 3rd glyphosate case in Missouri is due to start next week. The catalysts next in line will also include 1/ a St Louis case in early April 2/ news around disposals including Currenta and its Animal Health division. The latter could reportedly be worth $9B on its own.