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TEXT-S&P rates Celanese U.S. Holdings proposed notes
November 7, 2012 / 9:45 PM / 5 years ago

TEXT-S&P rates Celanese U.S. Holdings proposed notes

Nov 7 - OVERVIEW
     -- U.S. based chemical producer Celanese US Holdings LLC is issuing $500 
million in senior unsecured notes due 2022. 
     -- We assigned a 'BB' issue rating and '4' recovery rating to Celanese's 
proposed $500 million notes due 2022.
     -- We raised the issue rating on the existing senior unsecured notes to 
'BB' from 'BB-' and revised the recovery rating to '4' from '5'. 
     -- At the same time, we affirmed the 'BB' corporate credit and senior 
secured debt ratings on the company.
     -- The positive outlook reflects our opinion that, if operating 
performance remains strong and management continues to pursue a disciplined 
financial policy, we could raise the ratings modestly. 
 
NEW YORK (Standard & Poor's) Nov. 7, 2012--Standard & Poor's Ratings Services 
said today that it assigned its 'BB' issue rating and '4' recovery rating to 
Celanese's proposed $500 million notes due 2022. We also affirmed the 'BB' 
corporate credit rating on the company, as well as the 'BBB-' rating on the 
senior secured notes. We are maintaining our '1' recovery rating for the 
senior secured debt obligations, indicating our expectation of a very high 
(90% to 100%) recovery in the event of payment default. Also, we raised our 
rating on the senior unsecured notes to 'BB' and revised our recovery rating 
for both tranches of the unsecured notes to '4' from '5', indicating our 
expectation of an average (30% to 50%) recovery in the event of payment 
default.

"The company will use proceeds from the notes issuance to repay a portion of 
the outstanding term loans under the company's senior credit facilities, and 
to make a $100 million contribution to Celanese's U.S. pension plan," said 
credit analyst Liley Mehta. "The ratings on Celanese US Holdings LLC, a 
subsidiary of Celanese Corp., reflect our assessment of the company's
business risk profile as 'satisfactory' and a financial risk profile we view as 
'significant'."

The positive outlook reflects the company's above-par credit metrics, and our 
expectation of continued earnings growth over the next couple of years. Given 
its ongoing product innovation, geographic diversity, and efforts to boost 
productivity, we believe that Celanese can maintain its strong internal cash 
generation. We do not expect the company to make significant share repurchases 
or large acquisitions. We could raise the long-term ratings by one notch 
during the next several quarters if earnings and cash flow continue to 
increase, so that Celanese can preserve an FFO-to-total debt of 25% to 30% on 
a sustained basis. This could happen if the firm maintains debt near current 
levels while achieving annual top-line growth of 5% to 10% and EBITDA margins 
improving by 100 to 200 basis points from current levels.

On the other hand, we could revise the outlook to stable if FFO-to-total debt 
declines to less than 20% as a result of weaker end-market demand, 
greater-than-expected shareholder-friendly activity, or any large 
debt-financed acquisitions.
 
 
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
 
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.

Our Standards:The Thomson Reuters Trust Principles.
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