S&P drops Hexion, gives loan B, notes B-

Standard & Poor's said it lowered its corporate credit rating on Hexion Specialty Chemicals Inc. to B from B+.

The outlook is stable.

The agency said it also lowered the rating on the existing $225 million first-lien senior secured revolving credit facility to B from B+ and revised the recovery rating to 2 from 3.

At the same time, S&P said it assigned a B bank loan rating with a recovery rating of 2 to the company's proposed $2 billion first-lien senior secured term loan and $50 million first-lien synthetic letter of credit facility.

In addition, the agency said it assigned a B- rating and a recovery rating of 3 to a proposed $825 million second-lien senior secured notes issue, adding that the B- rating on the second-lien senior secured notes is one notch lower than the corporate credit rating reflecting the notes' junior claim on collateral and the presence of higher priority claims, including the first-lien debt, in the capital structure.

S&P said that the ratings on Hexion reflect a highly leveraged financial profile, a very aggressive financial policy and a weak business risk profile as a global manufacturer and marketer of thermoset resins.

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