Moody's rates LSB notes Ba3

Moody's Investors Service said it assigned a Ba3 corporate family rating and a Ba3-PD probability of default rating to LSB Industries, Inc. and a Ba3 (LGD4, 59%) rating to the company's proposed guaranteed senior notes due 2021. The outlook is stable.

Proceeds from the new debt offering will be used to repay some existing debt and to pre-fund planned capacity expansion projects.

The agency said LSB's Ba3 corporate family rating reflects the company's elevated leverage (March 31 debt-to-EBITDA ratio is 4.8 times pro forma for the proposed debt financing, including Moody's standard analytical adjustments), modest size, limited product diversity and recent operational issues that have affected production at each of its three chemical production facilities over the past 18 months.

The rating is supported by the robust conditions in the nitrogen fertilizer market, favorable long-term demand trends for agricultural chemicals and the company's advantaged cost position due to low natural gas prices in the United States, Moody's said.

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