S&P rates Arkema hybrids BBB-

S&P said it assigned its BBB- long-term issue rating to the proposed hybrid capital securities to be issued by Arkema SA. The amount is expected to be €300 million, subject to market conditions. The proceeds will be used for general corporate purposes and S&P estimates they will prefinance the remaining portion of Arkema’s €700 million hybrid issued in 2014 with a first call date in October.

“We understand the company intends to maintain the hybrid securities in its capital structure, for a total of €700 million on a pro forma basis,” said S&P in a press release.

“We expect the proposed securities to have intermediate equity content until first reset date, which is 20 years before the instrument’s effective maturity. This is because they meet our criteria in terms of subordination, permanence, and deferability at the company’s discretion during this period,” said S&P.

S&P said it arrives at the BBB- issue rating on the proposed securities by notching down from the BBB+ issuer credit rating on Arkema. The two-notch difference reflects S&P’s notching methodology, which calls for deducting:

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