S&P affirms Dow Chemical

Standard & Poor's said it affirmed its A- corporate credit rating and A-2 short-term rating on Dow Chemical Co. following the announcement that Dow plans to form a 50/50 joint venture company with Petrochemical Industries Co. of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corp.

The outlook is stable.

The venture will have roughly $11 billion of annual revenues and is expected to be formed by the end of 2008. Dow will contribute its polyethylene, ethylenamines, ethanolamines, polypropylene and polycarbonate assets to the venture and will receive pre-tax proceeds of about $9.5 billion.

The agency said it expects Dow to reinvest most of the proceeds to expand its performance chemicals portfolio, and S&P views the announcement as fully consistent with Dow's strategy to improve its position in basic chemicals and derivatives, while continuing to transform the business mix toward its higher-growth and differentiated performance products.

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