Moodys upgrades Ukraine sovereign rating to Caa3, outlook stable

MOSCOW (MRC) -- Moody's Investors Service has today upgraded Ukraine's government issuer rating to Caa3 from Ca, said the agency.

The rating outlook was changed to stable from negative. The nine new bonds created in Ukraine's debt exchange operation were rated Caa3, and the ratings of the 13 bonds they replaced -- including the three bonds issued by a government-guaranteed entity called Financing of Infrastructural Projects (Fininpro) in 2011 -- were withdrawn. The issuer rating of Fininpro was also raised to Caa3 from Ca, in line with the government's rating.

The decision to upgrade the sovereign rating of Ukraine's government to Caa3 is based on the following key drivers:

1. Settlement of the restructuring of USD15 billion in privately-held Eurobonds issued or guaranteed by the government, which eases Ukraine's debt-service requirements and strengthens the country's external liquidity; and

2. Progress in political and economic reform under the auspices of the IMF-led programme, supporting a rebalancing of the economy and a meaningful reduction in public and external financial deficits.

Moody's decision to assign a stable outlook on the government's Caa3 issuer rating reflects the current balance of risks, taking into account both the stronger external position -- including an easing of debt service requirements in the coming years -- and continuing multilateral/bilateral financial support, against a still highly fragile political and economic situation. Also, increased compliance with the Minsk Peace Protocol since September appears to have diminished the risk of a renewed escalation of the military conflict in the eastern regions of the country.

The rating agency adds however that implementation risks under the IMF Extended Fund Facility (EFF), which is the fundamental framework behind the roughly USD25 billion in official financial support being provided to Ukraine, remain significant given the challenging environment and are therefore an important constraint on the rating.

Concurrently, Moody's affirmed the Ca rating of the government's USD3 billion bond scheduled to mature on 20 December, 2015. The bond was not part of the debt exchange and therefore entails a higher level of risk than the new bonds just issued because Ukrainian officials have stated that this bond will not be paid on the due date.

As MRC informed earlier, in March 2015, Moody's Investors Service downgraded Ukraine's long-term issuer and government debt ratings to Ca from Caa3.
MRC

MOSCOW (MRC) -- LyondellBasell, one of the world's largest plastics, chemical and refining companies, has announced that it is advancing plans to build the world's largest propylene oxide (PO) and tertiary butyl alcohol (TBA) plant in the Houston area, as per the company's press release.

This project, considered to be the largest of its kind, is expected to create up to 2,500 construction jobs and approximately 100 permanent positions.

"We are moving forward in a deliberate fashion to develop what could become the single largest capital investment in LyondellBasell's history," said Chief Executive Officer Bob Patel. "We continue to believe that the combination of low-cost natural gas liquids available on the U.S. Gulf Coast, along with our leading proprietary PO/TBA technology, will allow this proposed project to capture maximum advantage of market opportunities."

The company will soon begin front-end engineering design work and file environmental permit applications. This phase will also include funding to order long lead-time equipment. A final investment decision is expected to be made following completion of the engineering design work.

The company's complex located in Channelview, Texas was selected as the site for the PO/TBA unit. The Bayport Choate site near Pasadena was selected for an ethers unit which will produce oxy-fuels for high octane gasoline. A split facility design between the Channelview and Bayport sites will optimize the product balances between the sites and create additional synergies.

This project is part of LyondellBasell's previously announced USD3 - USD4 billion expansion effort that will take place on the U.S. Gulf Coast over the next five years. LyondellBasell has already completed work on ethylene expansion projects at the company's La Porte and Channelview sites in Texas. A third ethylene expansion project is currently underway in Corpus Christi.

LyondellBasell first announced the PO/TBA project in August of 2014. Annual production capacities are anticipated to be one billion pounds of propylene oxide and two billion pounds of tertiary butyl alcohol.

The plant will sell PO in the global marketplace to meet growing demand for polyurethanes, which are used primarily for the manufacture of bedding, furniture, carpets and car seats. TBA and its derivatives, which include oxy-fuels, will be sold to meet the need for high octane gasoline blending components as well as for use in manufacturing synthetic rubber and lubricant additives.

As MRC reported earlier, in early October 2015, LyondellBasell announced the acquisition of SJS Plastiblends Pvt. Ltd. (SJS), thereby advancing the Company’s position in India’s expanding automotive market.

LyondellBasell is one of the world’s largest plastics, chemical and refining companies and a member of the S&P 500. LyondellBasell manufactures products at 56 sites in 19 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels.
MRC

MOSCOW (MRC) -- Japanese auto interior supplier Inoac Corp. agreed to plead guilty to fixing prices and rigging bids on parts sold to Toyota Motor Corp. between 2004 and 2012, the U.S. Justice Department said in a Nov. 19 statement, as per Plasticsnews.

Nagoya, Japan-based Inoac will pay a USD2.35 million criminal fine as part of the agreement.

Inoac is the latest company to be charged in the Justice Department’s ongoing, industry-wide investigation into price fixing by auto suppliers. Thirty-eight companies and 58 executives have been charged in the investigation, which has led to USD2.6 billion in criminal fines, the department said in a statement.

"Inoac corrupted the competitive process by agreeing with its competitors to fix the prices of certain automotive parts installed in Toyota cars sold in the United States," Brent Snyder, deputy assistant attorney general of the Justice Department’s antitrust division, said in the statement.

The supplier was charged with a felony for conspiring with its competitors "from as early as June 2004 until at least September 2012" to fix prices and rig bids on plastic interior trim parts including console boxes, glove boxes and assist grips.

"Inoac takes this matter with the utmost seriousness and it has enhanced its existing compliance program to include additional instructions to our employees and additional structures for compliance and monitoring," Inoac USA attorney Anthony Femminineo said in a statement.

Inoac’s U.S. operations are focused on polyurethane foam and interior trim. It had USD176 million in injection molding in North America according to the most recent Plastics News ranking of injection molders.

The charge was filed in U.S. District Court Nov. 19.

As it was written earlier, Toyota Motor regained its crown as the world’s biggest car company by sales, displacing Volkswagen as the embattled German manufacturer grapples with the fallout from its emissions cheating scandal. High quality global journalism requires investment. Toyota sold just over 7.49m vehicles in the nine months to September, 5.85m of which were outside Japan, while Volkswagen sold 7.43m. In the first six months Toyota sold 5.02m vehicles to VW’s 5.04m. Both saw sales fall 1.5 per cent for the nine months on a year-on-year basis.
MRC

MOSCOW (MRC) -- PET preform and bottle maker Constar Plastics BV in the Netherlands has ceased operations due to ongoing losses. Its machinery is set to be sold off in an auction, said Plasticsnews.

The company, which operated one plant in Zevenaar, closed in early September with the loss of 25 jobs. It had previously been part of U.S.-based Constar International Holdings, a former giant in the North American blow molded container market which entered bankruptcy protection in December 2013.

In early 2014, the U.S. business was sold to Plastipak Packaging, and Constar’s United Kingdom factory was sold to Sherburn Acquisitions, which then sold the plant to Esterform Packaging in January 2015. The Netherlands plant was sold to UTB Industry in May 2014 and was the only one to continue bearing the Constar name.

UTB Industry is a Dutch investment group which acquires loss-making companies with the objective of making them profitable. In its turnaround plan, UTB put money into Constar Plastics but was unable to stop its losses, said Dennis Draijer, management consultant at UTB.

"We made efforts to generate new business over one-and-a-half years but unfortunately without success," Draijer said.

Customers had taken their business to other rigid packaging producers when Constar entered bankruptcy, he said. Some returned to Constar Plastics under UTB’s ownership, but many of the larger, international customers did not bring their business back, he said.

Troostwijk Auctions is holding an online auction on Nov. 23 to sell Constar Plastics’ injection molding machines, blow molding machines, molds and auxiliary equipment. Draijer pointed out that included in the technology are two Husky PET preform systems fitted with Kortec co-injection technology.

As MRC informed earlier, in February 2014, Amcor Ltd. was unsuccessful in its bid to buy the North American assets of Constar International Holdings LLC.

Constar was a pioneer in the PET bottle business, and a few decades ago Constar and Amcor's U.S. predecessor — Johnson Controls Inc. — were the top two blow molders in North America, according to Plastics News' rankings.
Now, however, Amcor is still the No. 1 plastic bottle supplier, with North American sales of USD2.65 billion. According to Amcor, Constar's U.S. business now has six plants and annualized sales of about USD190 million.
MRC

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex and synthetic rubber, have reported its third quarter 2015 financial results with record net income of USD52 million and EPS of USD1.06 per diluted share, as per the company's report.

Additionally, results for the third quarter included Adjusted EPS of USD1.07 per diluted share, Adjusted EBITDA of USD116 million, and Adjusted EBITDA excluding inventory revaluation of USD144 million.

Commenting on the company’s performance, Chris Pappas, Trinseo President and Chief Executive Officer, said, "After a very strong first half, Trinseo continued with strong results in the third quarter. We had net income of USD52 million and earnings per diluted share of USD1.06. Adjusted EBITDA excluding inventory revaluation of USD144 million in the third quarter was our second highest ever, and we had very strong free cash flow of USD95 million."

Revenue in the third quarter decreased 21% versus prior year due to the pass through of lower raw material costs, with the significant decline in the overall energy complex, and currency, as the euro weakened in comparison to the U.S. dollar. Sequentially, revenue remained flat.

Third quarter Adjusted EBITDA of USD116 million included a USD28 million unfavorable impact from inventory revaluation. Adjusted EBITDA excluding inventory revaluation of USD144 million was USD82 million higher than prior year primarily due to higher margins in the Basic Plastics & Feedstocks division, including styrene monomer, styrenic polymers, and polycarbonate, as well as higher equity earnings from Americas Styrenics. Sequentially, Adjusted EBITDA excluding inventory revaluation was USD22 million higher due mostly to increased polycarbonate margins, the second quarter unfavorable impacts from price lag, and the planned Synthetic Rubber turnaround. These impacts were partially offset by lower styrene monomer margin and a decrease in equity earnings from Americas Styrenics.

As MRC wrote previously, Styron, the global materials company and manufacturer of plastics, latex and rubber, announced it has changed its name to Trinseo, effective February 1, 2015.

Trinseo is a leading global materials company and manufacturer of plastics, latex and rubber, dedicated to collaborating with customers to deliver innovative and sustainable solutions. Trinseo’s technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Trinseo had approximately USD5.3 billion in revenue in 2013, with 19 manufacturing sites around the world, and approximately 2,100 employees.
MRC