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A High Concentration Of LBOs And Leveraged Deals--23 Over Seven Years--Could Add Pressure To Chemical Sector Ratings Oct 07
Standard & Poors, Oct 2007
Abstract
The North American chemicals sector has seen its share of leveraged buyouts (LBOs) in recent years as the confluence of favorable industry fundamentals and highly liquid capital markets created an unprecedented flow of deals. With the increased threat of recession and higher energy prices indicating that difficult times are ahead, the question becomes, how will the companies involved in highly leveraged transactions fare now? The LBO cycle for chemicals has likely peaked, but several large transactions are still pending. The spate of recent buyouts also means that creditors will be following these leveraged issuers closely for years to come. From a default risk perspective, leveraged buyouts are typically negative events. Indeed, the health of the balance sheet may be the...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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