Research Update: Outlooks On Formosa Plastics Group Core Units Revised To Negative On Weakening Credit Metrics; 'A-' Ratings Affirmed

Taiwan-based FP group's profitability and cash flow generation have weakened materially and could continue to weaken under macroeconomic headwinds, high market uncertainty, and global capacity additions. The group's ratio of debt to EBITDA could rise above 2x over the next one to two years, given its rising capital expenditures and still-high cash dividends, coupled with weakening cash flows. On Oct. 22, 2019, S&P Global Ratings revised its outlook on the core members of the FP group to negative from stable. At the same time, we affirmed our 'A-' long-term issuer credit rating on the four core members of the FP group. We also affirmed the 'A-' issue rating on the senior unsecured notes issued by Formosa Group (Cayman) Ltd. and

...- Taiwan-based FP group's profitability and cash flow generation have weakened materially and could continue to weaken under macroeconomic headwinds, high market uncertainty, and global capacity additions. - The group's ratio of debt to EBITDA could rise above 2x over the next one to two years, given its rising capital expenditures and still-high cash dividends, coupled with weakening cash flows. - On Oct. 22, 2019, S&P Global Ratings revised its outlook on the core members of the FP group to negative from stable. At the same time, we affirmed our 'A-' long-term issuer credit rating on the four core members of the FP group. We also affirmed the 'A-' issue rating on the senior unsecured notes issued by Formosa Group (Cayman) Ltd. and proportionally guaranteed by the four core companies. - The negative outlook reflects the material downside risk that the group's ratio of debt to EBITDA could rise above 2x for a prolonged period....

Research Update