29 November 2012 11:21 [Source: ICIS news]
LONDON (ICIS)--Moody’s has retained its credit ratings for Brazilian chemical producer Braskem at Baa3, but cut its outlook for the company from stable to negative on the back of a weakening global petrochemicals industry, the ratings agency said on Thursday.
The outlook shift, which applies to all global scale and related debt ratings for Braskem Finance and Braskem America Finance Company, was also driven by the appreciation of the Brazilian real in 2011, which led to increased resin imports by Brazilian companies, reducing Braskem’s market share.
The impact of increased imports caused Braskem’s earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to fall to 8.9% from a historical average of 15% for the 12 months to September 2012, Moody’s said.
The agency also identified exposure to volatile naphtha and natural gas prices, dependence on Brazilian chemical company and shareholder Petrobras for those materials, and limited international diversity compared to global peers as contributors to the outlook downgrade.
Moody’s said: “The company's Baa3 ratings continue to reflect the company's sound business profile, size, scale and dominant position in the Brazilian petrochemical industry. Braskem also benefits from sponsorship of its two controlling shareholders (Odebrecht and Petrobras) that would likely support Braskem if required.
“Still, we expect Braskem's metrics to remain pressured in the medium term, owing to weaker economic conditions in Europe and North America, as well as tight margins and spending related to its greenfield project in Mexico,” the agency added.
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