Moody's Investors Services on Friday upgraded its baseline credit assessment of Saudi Basic Industries Corporation (SABIC) due to its "sustained improvement in operating performance and financial metrics".
The rating agency raised the BCA of the world's biggest petrochemicals group by market value to a1 from a2 and also affirmed the A1 senior unsecured ratings, adding that its outlook was stable.
"Today's upgrade of the BCA reflects the sustained improvement in operating performance and financial metrics reported by SABIC following the completion of a number of key growth projects, which have contributed to enhance its overall revenue and cash generating capacity," Moody's said in a statement.
Looking forward, Moody's cautioned that the downward pressures on product pricing witnessed in the petrochemicals markets in recent quarters may intensify going into 2013, as new capacity is expected to come on stream at a time when global economic growth conditions are uncertain.
"That said, 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," the rating agency said.
Earlier this month, SABIC posted a 23 percent slump in third-quarter net profit, citing lower product pricing for the decline.
Moody's said that trading conditions in the chemicals markets had "strongly recovered" from the sharp downturn of late 2008/early 2009.
In 2011, SABIC successfully completed a major capex expansion programme, which had seen the group invest in excess of $30bn in the previous five years.
The commissioning of the Yansab, Sharq and Saudi Kayan facilities and ensuing production ramp-up, helped fuel further volumes growth.
Last year, SABIC reported total production of over 69 million metric tonnes, as its facilities operated at close to full capacity, while utilisation rates at its international foreign affiliates, SABIC Innovative Plastics and SABIC Europe, further recovered and topped 80 percent.For all the latest industry news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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