Moody’s may lower Sasol

Moody’s Investors Service said it placed all of the ratings assigned to Sasol Ltd. and the senior unsecured notes rating of Sasol Financing International Ltd. under review for downgrade.

The downgrade review was prompted by the weakening of South Africa’s credit profile as captured by a recent decision to put South Africa’s Baa2 government bond rating on review for downgrade, Moody’s said.

The companies are linked to South Africa’s weakening economic prospects and fiscal strength, the agency said.

Sasol’s cash flow generation will remain heavily reliant on South African cash flow generation until 2018 when a United States ethane cracker begins production and generates cash, Moody’s explained.

South Africa, however, will remain a key cash flow generator at about 60%, where this could be higher depending on prevailing ethylene price conditions for the Louisiana ethane cracker, the agency said.

The existence of linkages of Sasol’s rating to the South African sovereign rating will remain absent further operating cash flow diversification to lower risk jurisdictions, Moody’s said.

© 2015 Prospect News.
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