Moody's downgrades Chemtura

Moody's Investors Service said it lowered Chemtura Corp.'s corporate family rating to Ba2 from Ba1 and its $500 million senior notes due 2016, $150 million senior unsecured notes due 2026 and $400 million senior unsecured notes due 2009 to Ba2 (LGD4, 53%) from Ba1.

The outlook was revised to stable from negative.

The agency said the downgrade reflects the fact that Chemtura's operational performance has not resulted in credit metric improvement in line with Moody's prior expectations.

The lowered Ba2 ratings continue to reflect Chemtura's high pro forma leverage, weak credit metrics and ongoing challenges at the non-flame-retardant plastic additives segment, Moody's said. Chemtura's pro forma debt-to-EBITDA ratio as of Dec. 31 was 4.3x, and the agency estimated that the company's debt includes $1.1 billion of funded debt, $294 million in unfunded pension obligations, $280 million of account receivable securitizations and $227 million in capitalized operating leases.

The move to a stable outlook reflects Moody's belief that there has been progress in managing the process of integration and remaining legacy issues and there exists the prospect of somewhat stronger retained cash flow generation over the next several years. The agency added that Chemtura's improved capital structure, with no material debt maturities until July 2009, combined with adequate liquidity also support the Ba2 rating and stable outlook.

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