Moody's upgrades SABIC's credit rating

In a recent report Moody’s Investor Services has announced that it upgraded the Saudi Basic Industries Corporation’s (SABIC) baseline credit assessment (BCA) on October 26, due to the company’s “sustained improvement in operating performance and financial metrics”. The agency raised the BCA of the world’s second largest diversified chemical company (as currently ranked by Forbes) to a1 from a2 and also affirmed the A1 senior unsecured ratings, adding its outlook as stable.

The Moody’s assessment has referred to the completion of a number of key growth projects, which have contributed towards allowing SABIC to enhance its overall revenue and cash generating capacity. These have included but are not limited to the commissioning of the YANSAB, SHARQ and SAUDI KAYAN affiliates. The ratings agency also highlighted SABIC’s successful completion of a major capex expansion project over 2011.

Moody’s cautions that  due to global economic growth conditions being uncertain, the downward pressures on product pricing witnessed in the petrochemicals market in recent years may intensify going into 2013. However, SABIC is “well equipped to withstand any sector downturn given its highly competitive cost position that is underpinned by the significant economies of scale afforded by its world-scale vertically integrated facilities”. This upgrade is a clear reflection of SABIC’s financial strength and operational excellence.