Fitch hints at lowering Dow, Rohm and Haas credit ratings

31 December 2008 21:28  [Source: ICIS news]

HOUSTON (ICIS news)--International credit agency Fitch Ratings said on Wednesday it could lower the short-term credit standings of both Dow Chemical and Rohm and Haas by least a notch  following the collapse of Dow's planned K-Dow joint venture with Kuwait's Petrochemicals Industries Co.

Dow has announced plans to acquire Rohm and Haas for $18.8bn , but Dow had also planned to use $7bn from its K-Dow joint venture to help fund the cash portion of the Rohm and Haas acquisition, Fitch said.

Fitch tagged the two chemical companies with a negative Ratings Watch given Dow's riskier leverage outlook if it plans on taking over Rohm and Haas without the money generated from a deal with Kuwait's Petrochemical Industries Co.

"Given the K-Dow announcement, Dow would need to fund the Rohm and Haas acquisition (as it currently stands) with nearly all borrowed funds," Fitch said.

"As such, Fitch cannot rule out the possibility of a more than one notch downgrade of both issuers' long-term IDRs (Issuer Default Ratings) from current levels."

Fitch already dropped Dow from A to BBB+ in July when the Rohm and Haas takeover was announced.

Rohm and Haas is also at BBB+, three spots above being considered junk.

Fitch also said the hint of a ratings drop for both companies is a reflection of the industry's bleak landscape.

"Further weighing on both companies' ratings is the fundamentally weak state of the chemical industry from a demand and margin perspective," Fitch said in a statement.

Fitch's decision comes a day after Rohm and Haas and Dow had its credit ratings downgraded by Standard and Poor's as well as Moody's.

 ($1 = €0.71)

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By: Ryan Hickman
+1 713 525 2653



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