S&P lowers Formosa Plastics

S&P said it lowered its ratings on Formosa Plastics Group and its senior unsecured notes issued by Formosa Group (Cayman) Ltd. and guaranteed by the four core companies to BBB+ from A-. The four core companies are Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp.

“Our rating action reflects the challenging macroeconomic conditions we believe the FP group will face in 2020 and possibly over the next few quarters, and the resulting weakening of credit metrics relative to our previous assumptions. The pandemic’s prolonged negative effect on the oil and chemical markets will deeply hit FP group’s performance over the next few quarters,” S&P said in a press release.

The agency said it expects the group’s ratio of debt to EBITDA to only recover to 2x-3x in 2021 and 2022, from the trough of about 4x in 2020, as the coronavirus outbreak moderates gradually.

The outlook is stable.

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