07 November 2003 23:10 [Source: ICIS news]
HOUSTON (CNI)--Moody's Investors Service (MIS) said Friday it has lowered its senior implied rating for Rhodia from Ba2 to B1, citing "the very weak financial profile of the group" and expectations of "weak debt protection metrics for the foreseeable future."
The outlook for Rhodia's ratings, said MIS, is negative.
Moody's also said it is lowering the senior unsecured and senior subordinated debt ratings for Rhodia to B2 and B3 respectively. Earlier, those two ratings had been Ba2 and Ba3 respectively.
In addition to what MIS termed Rhodia's "very weak financial profile," the ratings agency cited "challenges we foresee as the group intends to generate at least Euro700m ($798m) in disposal proceeds as it expects to execute fully valued disposals over the next 12 months … in a still depressed environment for the chemicals industry."
Moody's also cited Rhodia's "need to address an upcoming covenant breach at year-end and secure medium-term funding." The agency also said that Rhodia faces a challenge in "having to negotiate successfully with a large number of financing parties, some with differing creditor or support status."
"Moody's rating action today," said the agency, "reflects our concerns about the rapid deterioration in operating performance and cash flow generation of the group during 2003 and our expectations that this operating performance and debt protection metrics will remain weak (albeit improving moderately) during 2004."
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