S&P rates Braskem bonds BB-

Standard & Poor's said it assigned its BB- senior unsecured debt rating to the $100 million perpetual bonds to be issued by Braskem SA. The outlook is stable.

The perpetual bonds will be a senior unsecured obligation of Braskem and will allow for early redemption only at the company's option, in whole but not in part, starting in June 2010. The net proceeds will be used for general corporate purposes, including working capital and repayment of long-term debt.

S&P said the ratings on Braskem reflect the risks associated with price volatility of its main feedstock, naphtha; exposure to its home market of 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 efficiency initiatives being implemented by the company, conducive to structural cost reductions in the medium term and more resilience in cash flows, the agency said.

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