A report from the Fitch Ratings states that it maintains Dow Chemical Company's (Dow) ratings on rating watch positive.
The positive watch reflects expected de-levering through earnings growth and scheduled repayment of debt. Earnings should grow with full year results of Dow Corning (50 percent acquired) and production ramp-up from projects.
Fitch believes Dow's funds from operations (FFO) net leverage could be below 2x by the end of 2018 will trend down through the intended merger and spin-off (see DowDuPont merger/spinoff).
The ratings watch will be resolved when Fitch has further clarity on the operating profile and capital structure of the successor to Dow.
Key rating drivers
DowDuPont merger/spin-off
Fitch placed Dow's ratings on rating watch positive on Dec 11, 2015, following the announcement of the proposed merger of equals between DuPont and Dow Chemical Company. The merger is to be a share-based transaction scheduled to close Aug 31, 2017. The merger is projected to deliver cost synergies of around $3 billion and growth synergies of roughly $1 billion.
Read more: Dow maintains rating on positive watch: Fitch
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