CAIRO:Fitch Ratings has affirmed Saudi Basic Industries Corporation’s (SABIC) Long-term Issuer Default Rating (IDR) and senior unsecured rating at ‘A+’ and Short-term IDR at ‘F1′. The Outlook on the Long-term IDR is Stable. The senior unsecured rating on SABIC Capital’s guaranteed bonds has also been affirmed at ‘A+’.
The ratings reflect SABIC’s vertically integrated operations, state of the art world-scale production facilities and access to competitively priced natural gas feedstock (methane and ethane) in the Kingdom of Saudi Arabia (KSA, AA/Negative).
Competitive access to feedstock results in strong free cash flow and best-in-class EBITDA margins, especially in KSA which compensates for other under-performing regions. This mitigates the inherent cyclicality in SABIC’s markets (petrochemicals, agri-nutrients, metals) and has limited the cash flow impact of the group’s large expansion projects and occasional associated cost overrun or delays in the past.
In Fitch’s view, SABIC’s standalone business and financial profile already embed any benefits from its state ownership.
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