Moody's revises BASF's ratings outlook to stable from negative

06 December 2011 14:57  [Source: ICIS news]

LONDON (ICIS)--Moody's has revised its outlook on A1/P-1 senior unsecured ratings of Germany-based chemicals major BASF and its guaranteed subsidiaries to stable from negative, the credit ratings agency said on Tuesday.

“The stable outlook on the A1 ratings reflects our view that the deleveraging, supported by both the reduction in gross debt and a strong cash flow generation in 2011, as well as the agreed divestment of two commoditised businesses, expected to yield €1.3bn in cash proceeds, provide adequate financial flexibility at A1 rating level to accommodate conservative execution by BASF of its new 2015/2020 growth strategy,” Moody’s said.

On 29 November, BASF said it will continue to aim to grow 2 percentage points above global chemical production growth to increase sales by an average of 6% a year until 2020.

BASF added that in 2020 it is targeting sales of approximately €115bn ($153bn) and seeking to increase profitability to achieve earnings before interest, tax, depreciation and amortisation (EBITDA) of €23bn.

Moody’s added that the A1 ratings were supported by BASF's strong market presence in high-growth countries and the benefits of its diversified portfolio, with oil and gas contributing close to a third of the company's earnings before interest and taxes (EBIT).

Going forward, the credit ratings agency said that the A1 ratings remain conditional upon the ability of BASF to manage its ambitious growth strategy, including acquisition activities and investments, and its commitment to deliver growth in dividends and share buy-backs.

($1 = €0.75)

For more on BASF visit ICIS company intelligence

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

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