Moody’s upgrades INEOS debt on PetroChina deal

15 July 2011 14:25  [Source: ICIS news]

LONDON (ICIS)--Moody’s has upgraded its rating on INEOS debt following the successful closing of the refinery and oil products trading joint venture deal with state-owned PetroChina, the debt rating agency said on Friday.

It expects accelerated deleveraging given the $1bn (€710m) proceeds from the deal and current strong cash flow generation. However, Moody's warns that there is little scope in the near-term for incremental improvement in Switzerland-headquartered INEOS’s operating performance.

“We expect the leverage to reduce towards 4.5 times on the fully adjusted basis,” Moody’s said in a statement.

“Strong operating performance in 1H [the first half of] 2011 and the likely supportive supply/demand fundamentals for the main co-monomers should continue to support to the deleveraging efforts,” it added.

However, Moody's said: “We see limited potential for the incremental improvement in the operating performance in the near term, given the current high level of pricing and high utilisation rates enjoyed by INEOS.”

INEOS will operate a less risky business with the refining venture in place when it does not have to manage the significant working capital requirements associated with that business, Moody’s says.

A positive outlook has been put on the debt profile in the expectation that management will work to reduce the company’s interest burden over time.

($1 = €0.71)

For more on INEOS visit ICIS Company Intelligence

By: Nigel Davis
+44 20 8652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly