S&P may cut US Chevron Phillips Chemical's debt ratings

03 February 2009 01:50  [Source: ICIS news]

HOUSTON (ICIS news)--Standard & Poor's (S&P) may lower its ratings for Chevron Phillips Chemical due to weakness in both the global economy and the petrochemical market, the firm said on Monday.

S&P currently has a rating of 'BBB+' for Chevron Phillips' corporate credit and senior unsecured debt and an 'A-2' rating for the company's commercial papers.

"We are concerned about expected further deterioration in credit measures because of the weak global economy, poor petrochemical market fundamentals, expected heavy capital spending, and investment in joint venture projects for which committed financing is in place," said S&P's credit analyst Cynthia Werneth.

"In addition, the company relies heavily on debt that matures in the near term," she said.

A total of $800m (€624m) revolving credit facility will mature in July, while its other debt maturities include a $400m accounts-receivable securitisation programme that will mature in March 2010 and $500 million of notes due in March 2011, the ratings agency said.

Chevron Phillips has more than $3bn in total adjusted debt as of 30 September, a figure that includes the company's joint ventures, S&P said.

As such, the company's ratio of operation funds to debt is roughly 20%, S&P said. During an industry cycle, that ratio should be 35%.

($1 = €0.78)

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By: Al Greenwood
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