Moody’s upgrades ratings of US Westlake Chemical, cites feedstocks

27 September 2011 18:49  [Source: ICIS news]

HOUSTON (ICIS)--Moody’s has upgraded its ratings for US-based chemical producer Westlake Chemical to Baa3, from Ba1, the credit watchdog said on Tuesday.

Moody’s said the decision to upgrade Westlake reflects the company’s access to advantaged feedstocks and its improved profitability.

Importantly, Westlake’s “large cash balance” will be sustainable despite a significant increase in its capital spending to build a new chlor-alkali plant and expand ethylene plant capacities over the next several years, Moody’s said.

Westlake is building a new chlor-alkali plant at Geismar, Louisiana, and it plans to expand its ethylene crackers at Lake Charles, Louisiana.

In addition, Westlake may expand its ethylene cracker in Calvert City, Kentucky, if it can access a proposed pipeline that would carry ethane from the Marcellus shale geological formation to the US Gulf coast, the agency said.

Nevertheless, Moody's believes that even after completion of these projects, Westlake will still have in excess of $500m (€370m) in cash on its balance sheet.

Moody’s added that it has a positive view on North American-based ethylene production.

Rapid growth of shale gas production with high liquids content and the corresponding expansion of  related infrastructure in the US over the next two to three years should
allow US ethane feedstock prices to “remain advantaged”, compared with regions other than the Middle East, it said.

($1 = €0.74)

For more on Westlake and other producers visit ICIS company intelligence

By: Stefan Baumgarten
+1 713 525 2653

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