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Moody’s assigns Baa3 rating to Arkema hybrids
Moody’s Investors Service said it assigned a Baa3 long-term rating to the proposed offering of €300 million undated deeply subordinated fixed rate resettable notes (hybrid) issued by Arkema. The outlook is stable.
“The rating of Baa3 is two notches lower than Arkema’s Baa1 senior unsecured and issuer ratings. This reflects the deeply subordinated position of the proposed hybrid securities in relation to the existing senior unsecured obligations of Arkema rated Baa1.
The proceeds will be used for general corporate purposes and Moody’s expects they will refinance an existing hybrid instrument, so the proposed issuance will have no effect on Arkema’s Baa1 senior unsecured and issuer ratings.
The proposed hybrid is perpetual, has no events of default nor cross defaults and Arkema can opt to defer settlement of interest on a cumulative basis. The hybrid is a deeply subordinated obligation ranking senior only to common shares and junior to all senior and subordinated debt and will qualify for the basket C and a 50% equity treatment of the borrowing for the calculation of Moody’s credit ratios.
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