S&P rates Sabic Innovative BB

Standard & Poor's said it assigned its BB long-term corporate credit rating to Sabic Innovative Plastics Holding BV, reflecting a highly leveraged capital structure, mitigated primarily by an expectation of support from its parent Saudi Basic Industries Corp. (Sabic, A+/stable/A-1) and by its strong business risk profile.

The outlook is stable.

The agency said that the ratings reflect a very aggressive capital structure and weak cash flow metrics, with a funds-from-operations-to-debt ratio of about 5%-10% in the coming years and an initial peak leverage with debt to EBITDA of 7.9x according to its calculations.

The aggressiveness of the financial profile is the result of Sabic's proposed leveraged acquisition of GE Plastics for a total consideration of $11.6 billion excluding fees and expenses, which will be 70% debt financed, the agency noted.

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