Persistent pressure on profitability and a jump in adjusted debt will likely keep the financial leverage ratios of Formosa Plastics group companies elevated without significant prospects of returning to our base case level over the next two years. Chronic industry overcapacity amid tepid demand growth will prevent material improvement in the profitability of the group's commodity chemical business. This could constrain discretionary cash flow for significant debt reduction in 2025-2026. We have therefore lowered to 'BBB' from 'BBB+' the long-term issue credit ratings on the four companies--Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals&Fibre Corp., and Formosa Petrochemical Corp. The negative outlook reflects a material likelihood that chronic overcapacity could endure and keep the group's profitability weak
