Eastman Chemical Co.

The stable outlook reflects S&P Global Ratings' expectation that Kingsport, Tenn.-based Eastman Chemical Co.'s credit metrics, including its FFO to total debt, will remain appropriate for the rating at more than 20% on a weighted average basis over the next two years. We don't expect debt-funded shareholder rewards or any increase in debt that could weaken FFO to total debt to less than 20%. The company continues to generate enough cash for management to reduce debt. We believe Eastman will continue to generate cash flow in excess of its working capital and capital spending requirements. Our base-case assumptions include GDP growth of about 1.5%-2.0% in the U.S., about 1.0%-1.5% in the Eurozone, and about 5.0%-5.5% in the Asia Pacific region

...The company continues to benefit from its increasing emphasis on relatively stable, high-margin, specialty chemicals. Through sizable acquisitions over the past decade, Eastman has been successful at transforming itself from a commodity-focused company to a specialty chemicals majority. With this transition, the company has benefited from higher margins from many of the company's products. Credit metrics are appropriate for the rating. We expect the ratio of funds from operations (FFO) to debt to be above 20%. Our rating takes into account some potential for volatility in credit metrics. The company's earnings are susceptible to general macroeconomic downturns.S&P Global Ratings now expects that there is a 30%-35% risk of recession over the next 12 months. Some of Eastman's end markets, such as autos, are susceptible to economic pressures and we could see some impact to operating performance as a result. The company continues to offset some of this risk with initiatives such as innovation-driven...

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