In this report, S&P Global Ratings ranks global chemical companies from strongest to weakest. We rank companies 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 ranked 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 one-quarter of the ratings, we have applied one or more modifiers, which may include that for liquidity. We have noted the anchor and active modifiers of each company for informational purposes only. For our more detailed analysis, please refer to the Related Research section.

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 is higher, which constrains the competitive position. Government or group ownership or sovereign ratings are an explicit rating factor for about 18% of the companies.

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

The table and charts in this publication provide an overview of the 152 entities we rate in the chemical industry (see chart 1). We rate 64 entities as investment-grade ('BBB-' and above) and 88 entities as speculative-grade ('BB+' and below).

About 58% of chemical companies carry ratings below 'BBB-'. About 47% of these companies are owned by financial sponsors and carry comparatively higher financial risk.

Chart 1

About 67% of rating outlooks are stable, despite the challenging market environment of 2024 (see chart 2). This reflects low economic growth, still high inflation, and high interest rates. Margin resilience, quality of earnings, and financial policy support adequate rating headroom. 28% of rating outlooks are negative, reflecting cautious consumer consumption and subdued demand, despite the end of destocking in most value chains.

Chart 2

Our business risk profile assessments typically mirror our view of competitive positions in the chemical sector (see chart 3). Where they diverge, it is usually because we consider country risk is higher, which 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). About 66% of the issuers with significant assessments have relatively high business risk assessments of satisfactory or above, and about 50% 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 are 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 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 Jan. 6, 2025.

Related Criteria

• Sector-Specific Corporate Methodology, April 4, 2024
• Corporate Methodology, Jan. 7, 2024
• Group Rating Methodology, July 1, 2019
• Corporate Methodology: Ratios And Adjustments, April 1, 2019
• Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015

Related Research

• Industry Credit Outlook 2025: Chemicals, Jan. 14, 2025
• Industry Credit Outlook Update Europe: Chemicals, July 18, 2024
• Industry Credit Outlook Update North America: Chemicals, July 18, 2024
• Industry Credit Outlook Update Asia-Pacific: Chemicals, July 18, 2024
• Credit FAQ: Europe's Chemical Sector: Spotting Signs Of Recovery, April 11, 2024