Fitch Downgrades Huntsman to 'BB+' on Profitability Woes

Fitch Cuts Huntsman's Credit Rating

Fitch Ratings has downgraded Huntsman Corp. (NYSE:HUN) and Huntsman International LLC to 'BB+' from 'BBB-', assigning a negative outlook. The decision reflects the company's sustained weak profitability, which has fallen short of the rating agency's expectations.

Persistent Profitability and Leverage Challenges

The downgrade is driven by Fitch's projection that Huntsman's performance and credit metrics will remain weak through 2027. The agency anticipates leverage will stay above 4.0x during this period, following a spike to 7.9x in 2025. Factors pressuring the outlook include soft U.S. construction activity, rising energy costs, and structural challenges in Europe. While a 65% dividend cut improves free cash flow, it is not expected to eliminate the negative forecast.

Market Position and Financial Outlook

Despite the downgrade, Huntsman's ratings are supported by its leading market positions and strong financial flexibility, with approximately $1.0 billion in liquidity. The negative outlook signals that leverage is expected to remain high for the current rating level amid weak market conditions. A revision to stable could occur if market conditions recover faster than anticipated, enabling the company to deleverage effectively.

Summary and Forward Look

Huntsman faces a challenging period marked by Fitch's rating downgrade due to persistent profitability issues. The company's future rating stability now heavily depends on a significant market recovery and its ability to reduce leverage in the coming years.

FAQ

Q: Why did Fitch downgrade Huntsman?
A: Fitch downgraded Huntsman due to sustained weak profitability, high financial leverage, and an outlook for performance to remain weak through 2027.

Q: What is Huntsman's new credit rating from Fitch?
A: Huntsman's new long-term issuer default rating is 'BB+' with a negative outlook.

Source: Investing.com