Bulletin: BASF SE's Share-Buyback Program Will Reduce Its Rating Headroom

FRANKFURT (S&P Global Ratings) Jan. 6, 2022--S&P Global Ratings said today that the share-buyback program announced by Germany-based chemicals company BASF SE (A/Stable/A-1) will reduce the headroom at the current ratings. The program could total up to €3 billion over 2022-2023. Assuming a €1.5 billion share buyback this year, we expect that BASF's S&P Global Ratings-adjusted funds from operations (FFO) to debt will weaken by about 3% in 2022. Nevertheless, given our previous forecast of FFO to debt of above 40% this year, the ratio should remain in line with the 35%-45% range that we view as commensurate with the current ratings. BASF's strong operating performance in 2021 improved its rating headroom, with our estimate of FFO to debt increasing

...January 6, 2022 FRANKFURT (S&P Global Ratings) Jan. 6, 2022--S&P Global Ratings said today that the share-buyback program announced by Germany-based chemicals company BASF SE (A/Stable/A-1) will reduce the headroom at the current ratings. The program could total up to 3 billion over 2022-2023. Assuming a 1.5 billion share buyback this year, we expect that BASF's S&P Global Ratings-adjusted funds from operations (FFO) to debt will weaken by about 3% in 2022. Nevertheless, given our previous forecast of FFO to debt of above 40% this year, the ratio should remain in line with the 35%-45% range that we view as commensurate with the current ratings. BASF's strong operating performance in 2021 improved its rating headroom, with our estimate of FFO to debt increasing to 42%-44% by end-2021. FFO to debt after the announced share buyback would still be commensurate with the current ratings, assuming only a slight moderation in performance, alongside healthy market demand and a broadly neutral impact...

Bulletin