TEXT-S&P rates Dow Chemical proposed notes
Nov 6 - Standard & Poor's Ratings Services said today that it assigned its 'BBB' rating to The Dow Chemical Co.'s proposed offering of up to $2.5 billion of senior unsecured notes maturing in 2022 and 2042. The company plans to use proceeds primarily to repay or refinance debt or other obligations and for general corporate purposes. The existing ratings on Dow, including the 'BBB' corporate credit rating and 'A-2' commercial paper rating, remain unchanged. Dow's credit metrics are near the weaker end of our range of expectations at the current ratings, including adjusted debt-to-EBITDA of 3-4x, and operating results may well weaken somewhat more in coming quarters given our expectations of subdued global economic growth. However, year-to-date operating cash generation has been stronger in 2012 than 2011. Dow also recently announced significant measures that should serve to bolster credit quality. These include capacity closures, headcount reductions, and other cost-saving measures, as well as a considerable reduction in capital spending in 2013. In addition, the company stands to benefit from an improving petrochemical cost position based on low-cost North American shale gas. Importantly, management remains committed to maintaining or improving credit quality and plans to continue reducing debt even though it has achieved its goal of 40% net unadjusted debt to capital. Also, appeals in the K-Dow arbitration seem to have been exhausted, so that Dow should receive the $2.16 billion the International Court of Arbitration of the International Chamber of Commerce has awarded it, plus interest and arbitration costs. RELATED CRITERIA AND RESEARCH -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Key Credit Factors: Criteria For Rating Companies In The Global Commodity Chemicals Industry, Sept. 19, 2012 -- Key Credit Factors: Business And Financial Risks In The Commodity And Specialty Chemical Industry, Nov. 20, 2008 -- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 RATINGS LIST The Dow Chemical Co. Corporate credit rating BBB/Stable/A-2 Ratings Assigned $2.5 bil. sr unsec due 2022 and 2042 BBB Temporary contact numbers: Cynthia Werneth (347-233-0541); Liley Mehta (347-266-4565) Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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