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Fitch Ratings assigns OCI N.V. IDR of 'BB'(EXP).

London: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission, assigned OCI N.V. an expected Long-Term Issuer Default Rating (IDR) of 'BB'(EXP) with a Stable Outlook.

It assigned the Dutch chemicals group's proposed USD1 billion bond an expected senior secured rating of 'BB-(EXP)' with a Recovery Rating 'RR5'. OCI's 'BB(EXP)' rating incorporates an overall business profile commensurate with a 'BBB' category rating and our expectation that the currently weak 'B' category financial profile will improve in 2018.

Its lease-adjusted funds from operations (FFO) net leverage was 9.1x at end-2017, reflecting a large debt-funded expansion programme and production issues in North Africa. Our rating case forecasts a reduction in net leverage to around 5x at end-2018 on the back of new capacity ramp-ups and a return to historical utilisation rates in North Africa where production issues would have been sustainably resolved.

The Stable Outlook reflects Fitch's view that the execution risk on the capacity ramp-up is low and that volume growth, neutral-to slightly positive pricing trends and normalised capex levels will aid OCI's ability to de-leverage to FFO adjusted net leverage of 4.5x by 2020 and maintain an overall credit profile commensurate with a 'BB' rated entity. The senior secured bond expected rating of 'BB-(EXP)' reflects Fitch's assessment of the structure and security of the bond in relation to existing debt within the OCI consolidated group. The notes are structurally subordinated to around USD2.7 billion of secured debt owed by operating subsidiaries of OCI.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Jun 29, 2018
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