Standard & Poor’s raises Rhodia credit rating to 'BB'

16 September 2010 13:46  [Source: ICIS news]

LONDON (ICIS)--Standard & Poor’s (S&P) has raised Rhodia's long-term corporate credit rating to BB from BB- and assessed the polyamide and specialties producer's outlook as stable, the ratings agency said on Thursday.

The ratings agency said it upgraded Rhodia as the result of a rebound in the chemical industry and the specialty chemical company’s strong pricing power, partly due to a strong presence in emerging countries, improved profitability and adequate segment diversity.

“The upgrade reflects the much improved chemical operating environment, Rhodia's strong pricing power, good position in growth markets and segments, and resulting sustainably higher profits and credit metrics,” S&P said.

The ratings agency also assessed Rhodia's business risk profile as “satisfactory” rather than “fair”, after it factored in the group's globally balanced geographical sales and the diversity of its portfolio.

In particular, the ratings agency cited Rhodia’s acquisition of Chinese specialty amines producer Feixiang Chemicals as a main contributing factor to the group's “stronger-than-peer presence in emerging markets”, which “will increase the weight of its novecare segment”.

However, S&P warned that Rhodia’s other segments, including its polyamide business, were less stable as profit contributors compared with its acetow and eco-services businesses, as well as parts of novecare, as they served the more cyclical automotive, electronics, industrial and construction markets.

S&P added that Rhodia’s other weaknesses included the chemical sector's sensitivity to GDP swings, and energy and raw-material price fluctuations.

Looking ahead, S&P gave Rhodia a stable outlook, reflecting what it called supportive near-to medium-term industry fundamentals.

“We nevertheless anticipate volume growth to be very limited in 2011 after the very strong rebound, including some restocking, this year,” it added.

For more on Rhodia visit ICIS company intelligence
To discuss issues facing the chemical industry visit ICIS connect

By: Franco Capaldo
+44 (0)20 8652 3214

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