S&P rates Equate notes BBB+

S&P said it assigned BBB+ long-term and A-2 short-term corporate credit ratings to Equate Petrochemical Co. KSCC.

The agency also said it assigned a BBB+ rating to the $4 billion medium-term note program established by Equate Petrochemical BV and guaranteed by Equate and the Kuwait Olefins Co. KSCC.

S&P also assigned a BBB+ rating to the $1 billion notes due 2022 and the $1.25 billion notes due 2026 issued under the program.

The outlook is stable.

The corporate credit rating and issue ratings are in line with preliminary ratings assigned Oct. 17, the agency said.

Equate is a joint venture owned by Petrochemical Industries Company KSC, Dow Europe Holding BV (a subsidiary of the Dow Chemical Co.), Boubyan Petrochemicals Co. KSC and Al-Quarain Petrochemical Industries Co. KSC, S&P said.

The same shareholders hold the same proportion in Equate's sister company, the Kuwait Olefins Co. KSC, which guarantees Equate's debt, the agency said.

Equate's business risk profile is driven by the company's strong and resilient profitability with EBITDA margins between 35% and 40%, S&P said.

This positions Equate among the most profitable global chemicals companies rated by the agency, S&P added.

This is mainly because of the company's favorable position on the global cost curve for petrochemicals as a result of its competitively priced feedstock agreements with shareholders, the agency added.

Partly offsetting these strengths are the limited diversity and the inherent cyclicality to petrochemical commodity prices, S&P said.

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