S&P revises Equate view to positive

S&P said it revised Equate Petrochemical Co. KSCC’s outlook to positive from stable and affirmed the BBB ratings on the company and its debt.

“The faster than expected petrochemical price recovery and Equate's competitive cost advantage support above-average profitability and credit metrics. We revised the outlook given the faster than expected recovery of the petrochemical pricing environment, in particular ethylene glycol (EG), which comprises about 70% of Equate's combined revenue,” S&P said in a press release.

The agency said it forecasts ethylene glycol prices will recover to $660 per metric ton (/mt)-$680/mt in 2021, compared with our previous expectation of about $600/mt and the 2020 average of $450/mt, before tapering to $590/mt-$610/mt in 2022.

“The positive outlook indicates that we could raise the ratings on Equate over the next 12-24 months if FFO to debt remains above 30% on a sustainable basis, even with full distribution of profits and factoring in a tighter pricing environment in 2022 due to oversupply in the sector,” S&P said.

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