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Fitch downgrades Ineos to BB from BB+, S&P Affirms at BB On New Borrowing

INDUSTRIALS SECTOR


New Profile: Ba2[N]/BB[N][BB[S]



  • Ineos yesterday announced plans to raise ~€2bn via TLBs and other senior secured debt to refinance existing debt and fund acquisitions (LyondellBasell/TotalEnergies assets) amongst other uses.
  • Fitch expect net EBITDA leverage of 5.9x for 2023, peaking at 6.8x in 2024 driven by the weak chemical markets, acquisitions, and large capex before returning <4x in 2026.
  • ST liquidity is considered robust with €2.1bn in unrestricted cash as 9M23 versus €2bn of maturities in the next year (Q4 figures as of Friday: €1.7bn cash, €0.5bn WCF).
  • Fitch note governance concerns due to lack of independent directors and limited transparency mitigated by strong systemic governance and financial policies adherence.
  • S&P-adjusted ND/EBOTDA seen at 5.5x-6.0x for 2023 and 2024, including lease obligations and underfunded employee postretirement benefits.
  • Upgrades hinge on sustained leverage reduction (<3x for Fitch, improved wider credit quality for S&P), enhanced corporate governance, and market segment recover.
  • Downgrades could result from leverage metrics exceeding thresholds (>4x beyond 2025 for Fitch), deteriorated business profile, or aggressive debt-funded acquisitions.

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