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Dow Chemical to refinance debt

September 21/2020

MOSCOW (MRC) -- Dow has recently announced plans to refinance up to USD1.8 billion in senior bonds, including a USD1.25 billion term loan and up to USD550 million in bonds previously issued by Dow and legacy companies Union Carbide and Rohm and Haas, reported Chemweek.

The debt that will be refinanced is mostly due in 2023, and have varying interest rates. The new bonds will be due in 2030 and 2050, and pricing has not been determined.

Part of the refinancing will entail the term loan, and part of it entails a cash tender offer for up to USD550 million in a series of bonds, with the tender offer expiring on 14 September.

Dow is taking advantage of the low interest rate environment to extend maturities and keep interest costs low, says John Rogers, senior vice president at Moody's Investors Service (New York, New York). Credit metrics are likely to remain very weak relative to 2019 despite the expectation for a substantial improvement in performance in the back half of the year from second quarter levels. Moodys has rated the new bonds Baa2.

Fitch Ratings (New York, New York) rates the new debt BBB+, reflecting Dow's significant scale and diversification, relatively high margins, consistently strong cash flow generation and low cost position offset by its heightened exposure to hydrocarbons, the ratings agency says. Fitch believes Dow retains deleveraging capacity in a weaker macroeconomic environment, it adds.

As MRC informed previously, Dow said its sites along the US Gulf Coast reported no major damage from Hurricane Laura. Dows sites in Sabine, Beaumont, Deer Park, La Porte, Bayport and Texas City, Texas shut down operations prior to Laura making landfall. Dow's Freeport, Texas site continued operating as did facilities across Louisiana. Dow said it has not identified any significant structural damage or flooding at any of the facilities.

We remind that Dow Chemical conducted a 45-day scheduled maintenance at its propane dehydrogenation (PDH)unit in Freeport, Texas, from 8 July, 2020. This PDH unit has the capacity of 750,000 mt/y of propylene.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, propylene, ethylene, petrochemistry, Dow, Russia, USA.
Category:General News
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