Fitch Rates Braskem's Proposed Notes Due 2020 'BB+'

RIO DE JANEIRO & CHICAGO--(Business Wire)--
Fitch Ratings has assigned a 'BB+' rating to Braskem Finance Limited's proposed
notes issuance of approximately US$750 million due 2020 which will be
unconditionally guaranteed by Braskem S.A. (Braskem). The guarantee will rank
pari passu with other unsecured and unsubordinated obligations of Braskem. The
majority of this issuance proceeds will be used to refinance Quattor
Participacoes S.A's indebtedness, company in which is in process of being
incorporated.

Fitch currently rates Braskem as follows:

--Long-Term foreign Issuer Default Rating (IDR) 'BB+';

--Long-Term local currency IDR 'BB+';

--National Scale Rating 'AA(bra)'.

The Rating Outlook is Stable.

Braskem's ratings were affirmed on Jan. 25, 2010, following the announcement of
an agreement to acquire certain assets of Unipar for BRL700 million plus the
assumption of up to BRL170 million in long-term obligations of BNDES
Participacoes S.A. due 2015, which is currently under negotiation for tenor
extension. The assets to be acquired include Quattor Participacoes S.A,
Polibutenos S.A Industria Quimica and Unipar Comercial e Distribuidora S.A. To
finance this transaction, Braskem's shareholders committed to contribute with a
minimum amount of BRL3,5 billion. Thus, Fitch understood that the transaction
would not materially affect the company's leverage or liquidity over the short
and medium term.

On April 8, 2010, Braskem concluded its capitalization program in the amount of
BRL3.7 billion. This transaction reinforced Braskem's capital structure and
should reduce refinancing pressures after Quattor's incorporation. Braskem's
main shareholders, Odebrecht S.A and Petrobras S.A, contributed with BRL1
billion and BRL2.5 billion, respectively. Currently, Odebrecht and Petrobras
have 97% and 73.5%, respectively, of Braskem's voting and total capital.

Strategically, the acquisition is positive for Braskem as it further strengthens
the company's business in the domestic market (market share in thermoplastic
resins will reach 80%) and its competitive position in the global petrochemical
market. Fitch believes that Braskem should benefit from cost and operating
synergies as well as an improving business environment, which should result in
lower leverage approaching 3.0 times (x) by the end of 2010. Further
deleveraging efforts beyond 2011 are uncertain and ultimately will depend on
Braskem's level of investments, as the company continues to have ambitions plans
to reach a more significant position in the global petrochemical industry.

On Feb. 1, 2010, Braskem announced its international expansion with the
acquisition of the polypropylene (PP) business of Sunoco Chemicals, Inc. (Sunoco
Chemicals) in the U.S. for USD350 million. Fitch considered the size of this
transaction manageable, and believes that Braskem would benefit from greater
geographical diversification of its business as a result of this transaction.
Sunoco Chemicals' privileged location, logistics structure and access to
competitive raw materials are the main drivers for its acquisition. Sunoco
Chemicals' operating cash generation in 2009 was BRL150 million (around USD80
million).

Braskem's ratings reflect its dominant position in the Brazilian and Latin
American petrochemical sector. Integration of its activities gives Braskem a
competitive advantage within the region's petrochemical industry. The stronger
partnership with Petrobras and higher raw material diversification resulted from
the recent acquisitions also favors its business profile. The company's ratings
are also supported by its strong liquidity and extended debt profile that helps
mitigate the current high leverage resulting from the acquisitions.

Braskem's performance is strongly focus on the Brazilian economy, as around 80%
of its revenue is generated by the local market, although its prices are
benchmarked to the international market. For 2010 and 2011, Fitch expects that
the Brazilian economy will grow 5.3% and 4.6%, respectively. The favorable
environment for the domestic market should partially mitigate the lower
profitability coming with the expected cycle downturn of the global
petrochemical industry. Braskem's main challenges are related to the assets
integration recently acquired within a scenario of pressured prices for its
products. Nevertheless, Braskem has a strong track record of integrating
acquisitions that result in improved operating performance and generate
incremental of cash flow along the time.

The proposed notes issuance is in line with the strategy of refinancing
Quattor's indebtedness. As of December 2009, Quattor showed high refinancing
risk. At that period, Quattor's total debt was BRL7.4 billion, with 42% due up
to 2011, cash position was BRL672.7 million and Ebitda reached BRL550.7 million.
As of December 2009, Braskem's total debt was BRL11.6 billion, and cash and
marketable securities was BRL3.1 billion, with amortizations of BRL4.1 million
until 2011, including the tax rescheduling program (Refis). Braskem's Ebitda and
FFO were BRl 2.5billion and BRL1.6 billion, respectively.

Braskem's credit metrics are weak for the rating category. The company's ability
to return its metrics to prior levels will be key to maintaining its ratings at
current levels. The total debt/EBITDA ratio was slightly lower in 2009, at 4.7
times (x) compared to 2008, at 5.0x. The net debt/EBITDA ratios were 3.4x and
3.8x, respectively. On a pro forma basis, incorporating the Quattor and Sunoco
acquisitions, Braskem's net leverage ratio was 5.0x at the end of 2009.
Considering the capital injection (BRL3.7 billion), the ratio declines to 3.6x.

Braskem's liquidity remains substantial and essential to support the rating.
Even after the acquisition, Braskem's liquidity position remains robust compared
to its short-term debt and scheduled amortizations. With the capitalization
resources, the company's cash position (BRL7.5 billion) should be sufficient to
cover scheduled debt amortizations through 2011. The strategy shall be
pre-paying Quattor's debts and look for improvements in terms of payment terms
and financial cost. Fitch understands that in view of the strong liquidity shown
and proven access to the international debt market in recent years, Braskem
should be successful in its strategy.

KEY RATING DRIVERS:

Braskem's ratings may suffer negative pressures if the company fails to
refinance Quattor's debt profile. The ratings may also suffer negative pressures
if the company is unable to capture the expected synergies from the recent
acquisitions within a less favorable operating environment, reducing gains in
operating cash flow and frustrating de-leveraging trend. In the short to medium
term, event risk remains high, as the company will continue to seek growth
through acquisitions abroad. Depending on the financing strategy for future
strategic actions, size and funding for any investment plan could negatively
affect the company's leverage, liquidity and credit ratings. The ratings could
benefit from a greater-than-expected cash generation which could translate into
sustainable reduction in leverage and have a positive effect on the company
credit profile.

These rating actions reflect the application of Fitch's current criteria which
are available at 'www.fitchratings.com' and specifically includes the following
report:

--'Corporate Rating Methodology', dated Nov. 24, 2009.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings
Debora Jalles or Ricardo Carvalho +55 21 45032600, Rio de Janeiro
Jose Luis Villanueva +1-212-908-9158, New York
Media Relations:
Brian Bertsch, +1-212-908-0549, New York
brian.bertsch@fitchratings.com

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