S&P assigns Braskem Idesa, notes BB-

S&P said it assigned preliminary BB- ratings to Braskem Idesa and its proposed offer of up to $1 billion of secured notes. The agency assigned a 3 recovery rating to the notes. The 3 recovery rating indicates S&P’s expectation for meaningful recovery (50%-90%).

“Our BB- rating on Braskem Idesa reflects its focus on the production of one single product (polyethylene, with a wide range of uses), limiting its scale, its high dependence on ethane as its sole feedstock, and its high debt level. Our rating also reflects its short track record, because it started operating in mid-2016. In our view, these constraints are partially offset by its position as the largest polyethylene producer in Mexico, its vertical integration, its EBITDA margins that are above its peers due to a low cost raw material, and its diversified customer base,” said S&P in a press release.

The outlook is stable.

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