Moody’s affirms Dow ratings, outlook negative

01 May 2007 16:09  [Source: ICIS news]

TORONTO (ICIS news)--Credit watchdog Moody’s on Tuesday affirmed its debt ratings for Dow Chemical, reflecting the company’s improved operating performance and lower debt levels.

 

The outlook for the ratings remained negative.

 

Dow reduced its debt from over $21bn (€15bn) in 2002 to about $15.6bn in 2006 which should help it cope with the expected downturn in commodity chemicals markets in coming years.

 

Moody’s rates Dow’s senior unsecured long-term debt A3 and has a Prime-2 rating on Dow’s commercial paper.

 

Dow’s credit outlook was negative, due in part to its stated policy to manage debt to capital to a 40% target. This compared with Dow’s estimated current debt to capital of about 34%.

 

“To the extent that the company were to take actions that would raise its debt to capital toward its 40% target without a commensurate increase in earnings and cash flow the ratings could come under additional pressure,” Moody’s said.

 

Moody's added that Dow's ratings were tempered by relatively weak credit metrics, even when adjusting for its current debt levels and assuming that its asset light strategy raises earnings at the bottom of the cycle.

 

($1=€0.73)

By: Stefan Baumgarten
+1 713 525 2653

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