S&P: Chemical companies pressured

Deterioration in macroeconomic conditions over the past few months looks likely to put pressure on the earnings of European and Middle Eastern chemical companies, especially in 2009, and might trigger negative rating actions, said Standard & Poor's.

"In such an environment, companies with negative outlooks, about 20% of the total of 29 that we rate, face an increased risk of a rating deterioration," said S&P credit analyst Tobias Mock.

The outlook on six companies is currently negative: LyondellBasell Industries AF SCA (B/negative), Ineos Group Holdings plc (B+/negative), Carmeuse Holding SA (BB+/negative), Akzo Nobel NV (A-/negative/A-2), BASF SE (AA-/negative/A-1+) and SPCM SA (BB-/negative).

For all these companies, weaker profit generation in the coming years could trigger a downgrade because their current credit protection ratios are not strong enough to offset a material decline in operating profit, the agency said.

Nevertheless, the outlook is still stable on the majority of rated firms because they have managed to build up a cushion during the good economic conditions of the past years, and are therefore likely to maintain their credit strength, even in a weakening environment, S&P noted.

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