Moody's may downgrade SABIC Innovative Plastics

21 December 2007 22:31  [Source: ICIS news]

HOUSTON (ICIS news)--Moody's Investors Services may downgrade the ratings of SABIC Innovative Plastics due to the company's third-quarter results, the ratings firm said on Friday.

In its earnings statement, SABIC Innovative Plastics reported that rising costs in energy and feedstock as well as weakness in end markets dragged down its operating performance, Moody's said.

Moreover, trading conditions in  the company's markets will likely remain challenging in the upcoming months, Moody's said.

In addition, SABIC financed the acquisitions of Innovative Plastics using a highly leveraged funding structure, Moody's said. Such a structure could put more pressure on the credit of SABIC Innovative Plastics, Moody's said.

Nonetheless, the company could benefit from restructuring and other strategies to lower Innovative Plastic's cost structure, Moody's said. The company could also lower inventories and cut capital spending.

SABIC Innovative Plastics was not immediately available for comment on Friday at 4 pm Houston time (2200 GMT).

By: Al Greenwood
+1 713 525 2645

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