Aug 20 - Standard & Poor’s Ratings Services said today that its ratings on Mexichem S.A.B. de C.V. (BBB-/Stable/-- and mxAA/Stable/mxA-1+) are not affected following the company’s announcement of the signing of a memorandum of understanding with Occidental Chemical Corp. (A/Stable/--) for the creation of a joint venture. The joint venture includes construction of an ethylene cracker in Ingliside, Texas, with an estimated annual capacity of 500,000 tons.
At this point, the investment is still under feasibility studies and subject to several approvals. In our view, this announcement is in line with Mexichem’s strategy of undertaking investments that strengthen its vertical integration and business position and secure the supply of raw materials for its production. Our ratings on the company already incorporate the possibility of such growth initiatives, but sticking to its financial policy of keeping its net debt to EBITDA at no more than 2.0x.