Bulletin: Formosa Plastic Group Ratings Unaffected By U.S. Investment Plan

HONG KONG (S&P Global Ratings) April 27, 2018--S&P Global Ratings said today that its ratings and outlook on the core members of the Formosa Plastics group (Formosa Plastics Corp., Formosa Chemicals&Fibre Corp., Nan Ya Plastics Corp. , and Formosa Petrochemical Corp.; all rated BBB+/Positive/--) are not affected by the group's proposed investment plan in the U.S. We expect favorable market conditions and the group's lower planned capital expenditure in 2018-2019 to support its improved profitability and cash flow while further lowering its debt. This should in turn increase the group's financial headroom to fund the US$9.7 billion project. As of the end of 2017, the group's ratio of funds from operations (FFO) to debt was 67%, which is

...HONG KONG (S&P Global Ratings) April 27, 2018--S&P Global Ratings said today that its ratings and outlook on the core members of the Formosa Plastics group (Formosa Plastics Corp., Formosa Chemicals & Fibre Corp., Nan Ya Plastics Corp. , and Formosa Petrochemical Corp.; all rated ###+/Positive/--) are not affected by the group's proposed investment plan in the U.S. We expect favorable market conditions and the group's lower planned capital expenditure in 2018-2019 to support its improved profitability and cash flow while further lowering its debt. This should in turn increase the group's financial headroom to fund the US$9.7 billion project. As of the end of 2017, the group's ratio of funds from operations (FFO) to debt was 67%, which is higher than our base case of 50%-55%, due to a slightly higher EBITDA margin than we had projected. It also reflects the group's lower adjusted debt level, mainly because of a fair value change in its short-term investment. We will continue to monitor the...

Bulletin