Here, S&P Global Ratings ranks global chemical companies that we rate, from strongest to weakest. We rank companies, in turn, by the rating, outlook, stand-alone credit profile (SACP), business and financial risk profile, and liquidity assessment. Investment-grade companies are ranked by business risk profile, then financial risk profile. Speculative-grade companies are ordered by financial risk profile, then business risk profile. Companies are then listed in alphabetical order, if not distinguished by these factors.

In line with our corporate rating methodology, the final rating may differ from the SACP, where government, group, or rating above the sovereign considerations apply. Where the SACP differs from the anchor, as it does for more than a quarter of the ratings, we have applied one or more modifiers, which may include that for liquidity. We've noted the anchor and active modifiers of each company for informational purposes only. For our more detailed analysis, please refer to the company-specific pages on RatingsDirect via the hyperlinks below.

As we show in the charts and comments at the end of this report, most of our business risk assessments are closely correlated with the corresponding competitive positions. Where they diverge, it is usually because we consider country risk higher, and this constrains the competitive position. Government or group ownership or sovereign rating is an explicit rating factor for about 15% of the companies.

For our sector outlook and analysis, please refer the Related Research section at the end of this article.

Table 1

The table and charts in this publication provide an overview of the 158 entities we rate in the chemical industry. We rate 64 entities as investment grade ('BBB-' and above) and 94 entities as speculative-grade ('BB+' and below).

About 60% of chemical companies carry ratings below 'BBB-'. About 43% of these companies are owned by financial sponsors and carry comparatively higher financial risk.

Chart 1

About 84% of rating outlooks are stable which is driven by solid recovery in 2021 from recessionary conditions in 2020 and our expectation that the improvement in credit metrics is sustainable. The remaining outlooks are evenly distributed between positive and negative.

Chart 2

Our business risk profile assessments typically mirror our view of competitive position in this sector (see chart 3). Where they diverge, it is usually because we consider country risk higher, and this constrains the business risk profile.

Chart 3

The most common financial risk profile assessments in this sector are significant and highly leveraged (see chart 4). Over 58% of the issuers with significant assessments have relatively high business risk assessments of satisfactory or above, and about 47% of them carry an investment-grade rating.

The highly leveraged assessments typically reflect companies with stretched balance sheets and sponsor-backed holding company loans. Companies with stretched balance sheets are most vulnerable in an economic crisis. About 93% of companies with highly leveraged assessment is rated B+ or lower

Chart 4

Roughly 28% of the ratings incorporate one or more modifiers. Most often, this is the comparative rating analysis that we use for credit considerations that we have not already factored into the ratings. In the remaining cases our assessment of a company's financial policy refines the view of a company's risks beyond the conclusions arising from the standard assumptions in the cash flow/leverage assessment. This could, for example, capture the risks related to a company's appetite for large-scale debt-financed merger and acquisition or shareholder distributions that cannot be confidently predicted with regard to amount and timing.

We consider most of our rated chemical issuers to have liquidity that is adequate or better (see chart 5). This reflects the sector's good access to debt markets. Typically, the amount of cash that chemical companies maintain, combined with their cash generation and liquidity resources, will cover the uses of cash to which they have committed over the next 12 months by 1.2x or more.

Chart 5

The ratings and scores in this document are as of December 31, 2021.

Related Criteria

• Group Rating Methodology, July 1, 2019:
• Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015
• Corporate Methodology, Nov. 19, 2013
• Corporate Methodology: Ratios And Adjustments, April 1, 2019

Related Research

• Industry Top Trends 2022: Chemicals, Jan. 17, 2022
• ESG Credit Indicator Report Card: Chemicals, Dec. 2, 2021
• Credit FAQ: Pollution Sharpens Consumer Focus On The Global Chemical Sector, Oct. 27, 2021
• Industry Top Trends Update: Chemicals EMEA, Jul. 15, 2021
• Industry Top Trends Update: Chemicals North America, Jul. 15, 2021
• Credit FAQ: What Will U.S. Chemical Companies Face As They Recover In 2021 And Beyond?, Jun. 28, 2021