20 April 2009 17:30 [Source: ICIS news]
HOUSTON (ICIS news)--Moody’s Investors Service lowered the credit ratings of US producer Hexion Specialty Chemicals and kept the company’s overall outlook as negative due to weak end-market demand, the ratings service said on Monday.
“The downgrade reflects Moody’s expectation of a deeper and more prolonged trough in several of the company’s largest end-markets - construction, electronics and related commodity chemicals, as well as other important end-markets like transportation and automotive,” the report said.
“The prolonged downturn will likely keep credit metrics at unusually weak levels for a ‘B’ rated company.”
The drop followed Hexion’s preliminary 2009 first-quarter results announced earlier on Monday, in which the company said it anticipated a 82-94% drop in operating income from the 2008 first quarter due to lower volumes.
The negative outlook reflected uncertainty regarding the timing of demand and profit recovery, Moody’s said. Hexion’s liquidity could worsen if demand remained near current levels for much of 2009, according to the report.
However, any potential breech of the financial covenant remains unlikely over the next year due to a $200m (€154m) investment from parent company Apollo in the aftermath of the failed Huntsman merger, Moody’s said.
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