Fitch affirms ratings for Mexichem, expects more acquisitions

23 November 2011 15:09  [Source: ICIS news]

HOUSTON (ICIS)--Fitch has affirmed its ratings and a stable outlook for Mexichem, the US-based credit watchdog said on Wednesday.

Fitch noted Mexichem’s “aggressive growth strategy through acquisition” and said it expects the Mexican chemicals and plastics group to further drive its business through acquisitions and the consolidation of current operations.

Mexichem this week made an unsolicited bid for Dutch polyvinyl chloride (PVC) pipe producer Wavin.

The bid followed Mexichem’s recent acquisitions of INEOS Fluor, Polycid and Plasticos Rex, and of plastics compound producer Alphagary.

Fitch said Mexichem’s ratings were supported by its vertical integration and competitive cost structure, as well as its market shares in the Americas and Japan.

“The company's vertical integration acts to a degree as a barrier to entry in some of its markets,” Fitch said.

“Management's strategy continues to focus on adding value to the main raw materials source of the company: salt dome and fluorspar,” the agency added.

Fitch's ratings for Mexichem’s include – among others – the company’s $350m (€259m) senior notes due in 2019, which the agency rates “BBB-”, and Mexichem’s foreign currency issuer default rating, also rated at “BBB-”.

In September, the chemicals and plastics group agreed with six banks for lines of credit totalling up to $1bn to refinance debt and capitalise recent acquisitions.

($1 = €0.74)

For more on Mexichem and other producers, visit ICIS company intelligence

By: Stefan Baumgarten
+1 713 525 2653

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