Fitch affirms Rhodia; outlook negative

Fitch Ratings said it has affirmed Rhodia SA's long-term issuer default rating at BB- and simultaneously revised the outlook on the long-term issuer default rating to negative from positive.

At the same time, the agency said it has affirmed the company's senior notes and convertible bonds at BB-.

The revision of the outlook to negative from positive reflects Fitch's expectation that the sharp downturn in the global economy will negatively impact Rhodia's earnings and cash flow generation in 2009, which is likely to put downward pressure on ratings.

Despite management's declared priority on improving free cash flow generation, which includes capacity and general cost reduction measures as well as the discontinuation of the group's dividend policy in 2009, Fitch said it is concerned as to whether the group will be able to deal with the experienced drop in demand for its products since Q408.

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