Fitch could raise DEA

Fitch Ratings said it placed DEA Deutsche Erdoel AG's (DEA) BB long-term foreign-currency issuer default rating on rating watch positive following the signing of a letter of intent to merge the company with Wintershall Group, a subsidiary of BASF SE (A+/negative).

The agency also placed DEA's BB senior unsecured rating and the BB rating for senior unsecured notes issued by DEA Finance SA on positive watch.

Fitch said the action reflects its view that the business profile of the combined entity will be stronger than DEA's due to the larger scale of operations, diversified asset base, mainly in investment-grade rated countries, and good prospects for production growth.

The agency added that it will resolve the watch after the closing of the transaction, which could be in the second half of 2018, subject to regulatory approvals. Fitch’s assessment of the rating will also take into account the funding structure of the combined entity.

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