S&P Downgrades Huntsman to 'BB' on Weak Metrics

S&P Downgrades Huntsman on Weak Credit Metrics

S&P Global Ratings has lowered Huntsman Corp.'s credit rating to 'BB' from 'BB+', assigning a negative outlook. The downgrade reflects expectations that the company's weak credit metrics will persist through 2026.

Global Market Pressures

Huntsman faces significant headwinds across its global operations. In the U.S., high inflation and interest rates are suppressing demand, impacting its key divisions. S&P forecasts funds from operations (FFO) to debt will remain low at 12%-15%. Meanwhile, depressed consumer confidence in China has created excess chemical capacity, while high energy costs have challenged European operations.

Strategic Response and Economic Impact

In response, Huntsman initiated a $100 million cost-reduction plan, closing seven sites and reducing its workforce. The company also cut its dividend by 65% to preserve cash. While U.S. tariffs on Chinese chemical imports may offer some relief, a significant recovery depends on stronger demand. S&P projects adjusted EBITDA will improve to $375-$425 million in 2026.

Summary and Outlook

The negative outlook indicates a potential for a further downgrade if FFO to debt falls below 12%. Conversely, the outlook could stabilize if demand strengthens, pushing FFO to total debt sustainably into the 15%-20% range.

FAQ

Q: Why was Huntsman Corp. downgraded by S&P?
A: Due to weak credit metrics, with funds from operations (FFO) to debt forecasted at 12%-15%, driven by soft demand in the U.S., China, and Europe.

Q: What is Huntsman's current outlook?
A: The outlook is negative, signaling a risk of another downgrade if financial performance does not improve as projected by 2026.

Source: Investing.com