Fitch downgrades US Dow after Rohm and Haas settlement

13 March 2009 21:32  [Source: ICIS news]

HOUSTON (ICIS news)--Fitch Ratings downgraded on Friday its ratings of US chemical major Dow Chemical following the company’s recent settlement to close on its merger with Rohm and Haas.

Both Dow and Rohm and Haas were downgraded to a ‘BBB’ rating, just above speculative status. If Dow reaches that level, it could add to the company’s borrowing costs and complicate its ability to obtain credit.

Fitch also lowered the rating outlook for both companies to negative, meaning further downgrades are possible.

"The negative outlook status on both issuers reflects the risks associated with the execution of the delevering process and the weak demand environment for many segments of the chemical industry," Fitch said. "Dow’s ratings may be further downgraded over the short term if continued weak industry conditions persist."

Dow agreed to buy Rohm and Haas for more than $16bn (€12.5m), opting on Monday to pay nearly $79/share, with fees. Analysts have shown concern regarding the debt Dow must take on to finance the deal.

"Under the most realistic scenario, it will likely take at least two years to get credit metrics to more normalised levels for the current rating given the large amount of debt that will exist immediately after closing," Fitch said.

Dow shares closed at $7.56/share at the New York Stock Exchange on Friday, up 8% from Thursday’s close.

($1 = €0.78)

For more on Dow Chemical and Rohm and Hass visit ICIS company intelligence
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By: Ben DuBose
+1 713 525 2653



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