S&P rates OCI notes BB-

S&P said it assigned a BB- preliminary long-term issuer credit rating to OCI NV.

The outlook is stable.

The agency also said it assigned a preliminary BB- rating to OCI's proposed $1 billion equivalent euro- and U.S. dollar-denominated senior secured notes with five-year maturity.

The preliminary recovery rating on the notes is 4, indicating 30% to 50% expected default recovery.

The ratings reflect OCI's very steep de-leveraging trend with funds from operations-to-debt strengthening to about 20% in 2018 through 2019 despite the very high leverage OCI reported Dec. 31, 2017, S&P said.

This translates into nearly 9x adjusted debt-to-EBITDA of 5.5%, the agency said.

The elevated leverage in 2017 was due to bottom-of-the-cycle conditions in the nitrogen fertilizer market and extensive capital spending programs that are now coming to an end, S&P explained.

The company is expected to show substantially improved credit metrics in the next year, driven by increased volumes and higher capacity utilization across new and existing assets in a recovering market environment for both fertilizers and methanol, the agency added.

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