Dow to Issue $2.5 Billion in New Debt

摘要

Dow Chemical is planning to issue $2.5 billion in new senior unsecured bonds, reports say. The debt will be composed of $750 million in five- year bonds and $1.75 billion in ten-year bonds, according to Thomson Reuters. The five-year bonds are expected to be about 150 basis points above U.S. treasury notes, while the ten-year bonds 180 basis points above treasuries. Five-year treasuries are currently at 1.04%, while ten-years treasuries are at 2.53%. Credit ratings agency Standard & Poor's (S&P; New York) has rated the debt 'BBB-,' the lowest investment-grade rating and in line with Dow's overall credit rating. The outlook for the new bonds is positive, S&P says. "We expect Dow to remain committed to continuing to improve its capital structure and cash flow generation, and we could consider a modest upgrade during the next few quarters if it can achieve and maintain adjusted debt to Ebitda in the 3x-4x range," says S&P credit analyst Cynthia Werneth. Proceeds from the sale of the new bonds are expected to go towards refinancing, pension funding, and other general corporate purposes, according to S&P. Dow's adjusted debt to Ebitda ratio is currently in the high 4x range, the agency says.