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
The Dow Chemical Co.
Corporate credit rating BBB/Stable/A-2
$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.