Moody’s upgrades US Ashland on improved economic prospects

17 March 2010 18:26  [Source: ICIS news]

TORONTO (ICIS news)--Moody’s has upgraded its ratings for US specialty chemicals producer and distributor Ashland because of prospects for a continued economic recovery and improvement in the company’s end markets, it said on Wednesday.

Ashland has also benefited from cost cutting initiatives, strong margins in certain businesses and its ability to raise prices to offset raw material price increases despite a difficult demand environment, the credit ratings agency said.

In addition, Ashland’s functional ingredients and water technologies products proved to be less affected by the global economic downturn than typical cyclical chemicals, the agency said.

“While volumes have not improved in all of Ashland's businesses, visibility of future demand has improved, as have general business conditions,” it said.

Financially, Ashland had achieved strong cash flow generation since its $2.6bn acquisition of rival Hercules in 2008, allowing it to repay over $1bn (€730m) of debt.

Ashland was expected to maintain good liquidity despite possible investments in specialty chemicals businesses, either through capital expenditure for growth projects or modest bolt-on acquisitions, Moody’s said.

Moody’s lifted its corporate family rating for Ashland to “Ba1” from “Ba2”, and upgraded ratings on a range of Ashland’s notes, loans and credit facilities, it said.

($1 = €0.73)

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By: Stefan Baumgarten
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