S&P affirms Braskem

Standard & Poor's said it affirmed its BB local-currency and BB- foreign-currency corporate credit ratings on Braskem SA. The outlook is stable.

S&P said the ratings on Braskem reflect the risks associated with price volatility of its main feedstock, naphtha (sustained at historic highs for a very long time already), reliance on its home market Brazil for EBITDA and sales generation and growing competition with the consolidation and expansion of other players, some of them using alternative feedstock.

These negatives are mitigated by Braskem's leading business and market position in the Latin American petrochemical industry, economies of scale and some level of geographic diversification, increasing technological expertise and all efficiency improvement initiatives being implemented by the company, both in its financial and industrial profiles, which should result in structural cost reductions in the medium term and therefore more resilience to cash flow, especially when compared with the performance in past years, according to S&P.

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