S&P puts Solvay on watch

Standard & Poor’s said it placed the BBB+ long-term and A-2 short-term corporate credit ratings on Solvay SA on CreditWatch with negative implications.

The agency also said it placed the ratings on the company’s debt on CreditWatch negative.

The CreditWatch placement follows news that Solvay entered into a €5.5 billion merger agreement with Cytec Industries Inc.

The agency said it expects the merger to materially weaken Solvay’s credit protection measures.

But, S&P said it expects the transaction to improve Solvay’s business risk profile by strengthening the company’s absolute profitability.

The merger supports the company’s strategy to reduce the volatility of its profit generation by increasing the share of less volatile specialty chemicals and deepening its geographic footprint, especially in North America, the agency said.

These strengths are partially offset by Cytec’s somewhat higher capital expenditure needs, S&P said.

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