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Rating Action:

Moody's assigns Ba2 rating to Celanese's new unsecured Euro notes

08 Sep 2014

New York, September 08, 2014 -- Moody's Investors Service assigned a Ba2 rating to Euro 300 million of senior unsecured notes due 2019 to be issued by Celanese US Holdings LLC (CUSH), a wholly-owned subsidiary of Celanese Corporation. Moody's also assigned Baa3 ratings to CUSH's proposed extension of its revolver and term loan. Celanese will be increasing the size of their revolver to $900 million from $600 million as part of this amendment. Proceeds from the notes and balance sheet cash will be used to repay its high cost 6.625% notes due 2018 ($600 million principal) that become callable in October 2014. Moody's also changed the Loss Given Default Assessments on Celanese's existing unsecured debt as it will comprise a smaller proportion of the debt structure.

"These actions will help Celanese offset a portion of the earnings headwind next year brought about by the expiration of a low cost methanol contract in mid-2015," stated John Rogers, Senior Vice President at Moody's.

Ratings assigned

..Issuer: Celanese U.S. Holdings LLC

....Senior Secured Bank Revolving Credit Facility Oct 31, 2015 at Baa3, LGD2

....Senior Secured Bank Term Loan Facility at Baa3, LGD2

....Senior Unsecured Euro Notes due 2019 at Ba2, LGD4

Note: Ratings on Celanese's existing secured revolver, term loan and 2018 notes will be withdrawn upon completions of the financing. Moody's also changed the Loss Given Default Assessments on Celanese's existing unsecured debt as it will comprise a smaller portion of the debt structure.

RATINGS RATIONALE

Celanese's Ba1 Corporate Family Rating (CFR) is supported by its size and leading global positions in the acetyl chain and substantial operational, geographical and product diversity. The company's elevated exposure to developing markets and investments in new capacity with access to low-cost feedstocks is a credit positive and bodes well for continued earnings growth over the longer term. The company's specialty segments (Engineered Materials and Consumer Specialties) provide more earnings stability and greater growth potential. The rating is tempered by meaningful exposure to volatile pricing and margins in its Acetyl Intermediates segment, sizable debt-like liabilities, management's lack of targeted credit metrics for the firm and the expiration of a low cost methanol contract in 2015. Although management has stated its desire to reduce debt and achieve an investment grade rating, they have not provided specific details on the timing or amount of debt repayment that will occur. The company continues to maintain a large cash balance that will drop below $1 billion as a result of this refinancing and debt paydown.

The Baa3 rating on the secured facility is due to its senior position in the capital structure relative to $1.5 billion of unsecured debt. The Ba2 rating on the unsecured notes, one notch below the CFR, reflects the subordination relative to almost $1 billion of secured debt. If Celanese reduces secured debt by more than $300 million, the unsecured notes would be upgraded to Ba1.

As of June 30, 2014, proforma for this refinancing, Celanese had Debt/EBITDA of just under 3.0x and Retained Cash Flow/Debt of nearly 18.5% which is fully supportive of a Ba1 rating. The aforementioned metrics include Moody's standard adjustments, which add over $2 billion of additional debt to the company's balance sheet: $960 million for the capitalization of operating leases and $1.1 billion for pension liabilities.

Despite Celanese's very large cash balance, Moody's does not apply net debt metrics as further debt reduction is not a high priority and management has not provided clear guidance on the use of cash or its targeted financial metrics. Net debt credit metrics are supportive of an investment grade rating but the capital structure, with a large amount of secured debt, is not.

The principal methodology used in this rating was Global Chemical Industry rating methodology published in December 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Celanese Corporation, headquartered in Irving, Texas, is a leading global producer of acetic acid, vinyl acetate monomer, emulsions, acetate tow, engineered thermoplastics and food ingredients. Celanese reported sales of $6.7 billion for the LTM period ended June 30, 2014.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

John Rogers
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Brian B Oak
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Ba2 rating to Celanese's new unsecured Euro notes
No Related Data.
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