NEW YORK, Dec 29 (Reuters) - Standard & Poor's on Monday cut its ratings on Dow Chemical Co and said it may cut them again after Kuwait scrapped a deal to form a $17.4 billion petrochemical joint venture with the company.
Kuwait scrapped the deal on Sunday, potentially also upsetting the largest U.S. chemicals company's plans to buy rival Rohm & Haas. For details, see
'This decision was unexpected given Dow's recent confidence that it would close the transaction, and is a significant development from both a strategic and financial profile standpoint,' S&P said in a statement.
It noted that the venture 'would have provided Dow with approximately $7 billion of after-tax cash proceeds to help fund the pending $19 billion acquisition of Rohm and Haas, including assumed debt,' S&P said.
S&P cut Dow's corporate credit rating two notches to 'BBB,' the second lowest investment grade, from 'A-minus.' Rohm & Haas' 'BBB' rating was also placed on review for downgrade.
The failed deal is also a setback for Dow as its completion would have muted the company's exposure to the petrochemical downturn and emphasized its reliance on its growing array of differentiated and industrial chemicals, S&P said.
The cost to insure Dow's debt with credit default swaps jumped to 353 basis points, or $353,000 per year for five years to insure 410 million in debt, from 275 basis points on Friday, according to Markit Intraday.
(Reporting by Karen Brettell; Editing by Leslie Adler) Keywords: DOWCHEMICAL RATING/SANDP (karen.brettell@thomsonreuters.com; +1 646 223 6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Kuwait scrapped the deal on Sunday, potentially also upsetting the largest U.S. chemicals company's plans to buy rival Rohm & Haas. For details, see
'This decision was unexpected given Dow's recent confidence that it would close the transaction, and is a significant development from both a strategic and financial profile standpoint,' S&P said in a statement.
It noted that the venture 'would have provided Dow with approximately $7 billion of after-tax cash proceeds to help fund the pending $19 billion acquisition of Rohm and Haas, including assumed debt,' S&P said.
S&P cut Dow's corporate credit rating two notches to 'BBB,' the second lowest investment grade, from 'A-minus.' Rohm & Haas' 'BBB' rating was also placed on review for downgrade.
The failed deal is also a setback for Dow as its completion would have muted the company's exposure to the petrochemical downturn and emphasized its reliance on its growing array of differentiated and industrial chemicals, S&P said.
The cost to insure Dow's debt with credit default swaps jumped to 353 basis points, or $353,000 per year for five years to insure 410 million in debt, from 275 basis points on Friday, according to Markit Intraday.
(Reporting by Karen Brettell; Editing by Leslie Adler) Keywords: DOWCHEMICAL RATING/SANDP (karen.brettell@thomsonreuters.com; +1 646 223 6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.