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Moody’s rates Chevron Phillips notes A2
Moody's Investors Service said it assigned an A2 rating to $1.05 billion in new notes to be issued in five- and 10-year tranches by Chevron Phillips Chemical Co. LLC (CP Chem) and Chevron Phillips Chemical Co. LP.
The company anticipates using the proceeds to repay the $750 million senior unsecured notes due May 2018 and the $300 million term loan facility.
Moody’s said CPChem's A2 ratings balance an excellent business position and very strong credit metrics with expected margin compression for ethylene producers in the second half of 2018 and uncertainty about the company's growth plans following a multi-year major construction project to build a new ethane cracker and two polyethylene units on the U.S. Gulf Coast.
“The rating also benefits from the past actions of the company's strategic owners, Chevron Corporation (Aa2 stable) and Phillips 66 (A3 negative), which, while they do not guarantee the debt, have demonstrated support, including temporarily suspending distributions and allowing the company to repay all rated debt earlier in the decade,” the agency said in a news release.
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