Moody’s: Hexion notes Caa3

Moody's Investors Service said it assigned a Caa3 (LGD 5) rating to Hexion Inc.'s $225 million senior secured notes due 2022.

The proceeds from these notes, along with an upsized $485 million of new first-lien notes and cash, will be used to refinance the existing senior secured notes due 2018 and pay fees and expenses, the agency said.

The issuance of these notes prevents the $485 million of first-lien notes due 2022 issued by Hexion 2 U.S. Finance Corp from having to be placed in escrow, Moody’s explained.

All of Hexion's other ratings are unchanged, including its Caa2 corporate family rating.

The outlook is negative.

The issuance will greatly improve Hexion's liquidity, but the company is paying a fairly hefty price to issue debt that matures after roughly $574 million of second-lien notes in 2020, the agency commented.

Hexion’s financial performance will have to improve significantly by 2020 to refinance roughly $2.4 billion of maturing debt, Moody’s said.

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