SABIC deemed low risk in first Moody's assessment

04 April 2007 14:35  [Source: ICIS news]

LONDON (ICIS news)--Moody’s on Wednesday opened its coverage of Saudi chemicals giant SABIC, deeming it a very low credit risk with a stable outlook.

 

SABIC was assigned a long term foreign and local currency rating of A1, reflecting the strong global positions it has built over the last three decades in the petrochemical and fertilizer markets.

 

“SABIC enjoys a highly competitive cost position reflecting the significant economies of scale afforded by its world-scale, vertically integrated facilities,” said the investors' service in a statement.

 

The company has access the gas and liquid feedstock under long-term contracts with 100% government-owned Saudi Aramco at highly competitive prices.

 

Although Moody’s noted the volatility inherent in SABIC’s commodity-like products, it asserted that the company’s above industry-average profit margins underpinned by its feedstock cost advantage offsetted the risks.

 

Moody’s also opened coverage of Netherlands-based subsidiary SABIC Europe with a Baa1 senior unsecured issuer rating, implying a moderate credit risk with certain speculative characteristics.

 

“SABIC Europe's Baa1 rating reflects credit fundamentals combining sizeable market positions in the cyclical European polyolefins sector, underpinned by a favourable cost structure with increased financial leverage post Huntsman UK acquisition,” said the statement.

 

Headquartered in Riyadh, Saudi Arabia, SABIC is a diversified industrial conglomerate that is 70%-owned by the Kingdom of Saudi Arabia and principally active in petrochemicals, fertilisers and metals with consolidated revenues of around $23bn in 2006.

By: Mark Watts
+44 20 8652 3214

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