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BASIC INDUSTRIES: Celanese (CE Ba1[N]/BB+/BBB-): Moody’s Downgrade

BASIC INDUSTRIES
USBulletCredit BulletsNorth America

Asset sales will be an important factor going forward. Consensus has ~1.5x turns of deleveraging baked in over two years, with a stated aim of returning to IG. The rating should hold if that plays out, with an eventual return to IG achievable.

  • This move always looked likely absent an asset sale, following a weak 3Q24; Moody’s moved to watch negative on the back of that. The downgrade takes the average rating to sub-IG, bonds will transition from IG to HY indices at month end.
  • Moody’s doesn’t expect significant deleveraging from current 5-6x adj. gross, despite the stated 3x target from management. It sees market conditions as remaining challenging. It has a 3.5x ceiling for Baa3. They see leverage approaching 4.5x by FY26 and could downgrade it again should that disappoint.
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Asset sales will be an important factor going forward. Consensus has ~1.5x turns of deleveraging baked in over two years, with a stated aim of returning to IG. The rating should hold if that plays out, with an eventual return to IG achievable.

  • This move always looked likely absent an asset sale, following a weak 3Q24; Moody’s moved to watch negative on the back of that. The downgrade takes the average rating to sub-IG, bonds will transition from IG to HY indices at month end.
  • Moody’s doesn’t expect significant deleveraging from current 5-6x adj. gross, despite the stated 3x target from management. It sees market conditions as remaining challenging. It has a 3.5x ceiling for Baa3. They see leverage approaching 4.5x by FY26 and could downgrade it again should that disappoint.