14 June 2005 02:01 [Source: ICIS news]
SINGAPORE (CNI)--Moody’s Investors Service has affirmed the Ba1 rating on Canada’s Methanex and upgraded its outlook to positive from stable, saying this reflected the improving outlook for the company’s financial performance and the methanol market.
The ratings agency said that Methanex, the world’s largest methanol producer with a 20% market share, was in a good position due to the elevated feedstock costs for producers without access to low-cost natural gas, the shutdown of additional capacity and its recently renewed bank facility that benefits bondholders.
The company’s long-term low price natural gas contracts, relatively conservative financial policies, significant logistical benefits due to the volume of methanol sold globally, and a large cash balance helped the company’s rating, said Moody’s.
However, it added that the ratings were tempered by the business risk producing just one commodity, the limited number of locations with access to low-cost gas, concerns over supply of natural gas from Argentina, and the significant amount of new methanol capacity that will come onstream up till 2008.
Moody’s said that if Methanex successfully refinanced its $250m in debt, which matures in August 2005, and free cash flow remained above $200m on an annual basis before end-2005, it could raise the rating. But if methanol prices dropped below $150/tonne and free cash flow fell below $150m, then the outlook on the company’s rating could return to stable.
Methanex, which has methanol plants in Chile, Trinidad, New Zealand and Canada, reported revenues of $1.8bn for the year ended 31 March 2005.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|