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Announcement:

Moody's changes Celanese's outlook to positive

06 Apr 2012

New York, April 06, 2012 -- Moody's Investors Service has moved Celanese Corporation's (Celanese) outlook to positive from stable due to the expectation that the combination of improved operating performance and ongoing modest debt reduction will cause credit metrics to improve to levels that would support a higher rating over the next year.

The firm's Ba2 Corporate Family Rating (CFR), existing debt ratings and Speculative Grade liquidity (SGL) rating of SGL-1 were also affirmed.

"Despite weaker year-over-year profits in the fourth quarter of 2011, Celanese performed better than many of its peers and its financial performance is expected to meaningfully improve in 2012," stated John Rogers, Senior Vice President at Moody's. "Additionally, Mark Rohr, the new CEO, has stated that debt reduction is also a higher priority for the company."

RATINGS RATIONALE

Celanese's Ba2 CFR takes into account the company's size and leading global positions in the acetyl chain, with strong operational, geographical, and product diversity. In addition, the company's elevated exposure to developing countries, along with on-going capital spending in Asia, bodes well for continuing growth over the next several years. The rating is tempered by significant exposure to volatile petrochemical feedstocks and sizable debt-like liabilities (pensions and capitalized operating leases). Although management has stated its desires to achieve an investment grade rating, the lack of publicly stated financial targets has slowed the upward progression of the ratings. A recent statement by the new CEO indicates that debt reduction will become a higher priority for the company. To the extent that the company provides guidance to the market on its targeted capital structure and financial metrics, there could be upside to the rating. However, Moody's would not move to an investment grade rating until the company has refinanced its secured debt and initiated the process to establish an unsecured credit facility.

The positive outlook reflects the expectation for further improvements in operating performance along with modest debt reduction. We currently expect that Celanese's credit metrics will rise to levels that would support a higher rating over the next year. Moody's noted that the company has reduced balance sheet debt by almost $500 million over the past two years but increases in pension liabilities and capitalized operating leases have forestalled a more significant improvement in its adjusted financial metrics.

As of December 31, 2011, the company had Debt/EBITDA of 3.5x and Retained Cash Flow/Debt of 21%. To the extent that Celanese's Debt/EBITDA falls to below 3.3 times and Retained Cash Flow/Debt remains near 20%, a rating upgrade would occur. Additionally, if management provides guidance on its targeted financial structure along with a timeframe for achieving their targets, Moody's could assess the appropriateness of a higher rating. However, if operating performance is weaker than anticipated and Debt/EBITDA remains over 3.5x, Moody's would likely return the outlook to stable. To the extent that Debt/EBITDA rises to over 4.0 times and Retained Cash Flow/Debt declined to below 15%, on a sustainable basis, Moody's would likely lower the company's rating.

Celanese's SGL-1 Speculative Grade Liquidity rating is supported by a large cash balance of over $650 million, expected free cash flow generation of at least $200 million over the next year and full availability under its $600 million revolving credit facility.

The following summarizes the existing ratings:

Celanese Corporation

Ratings affirmed:

Corporate Family Rating -- Ba2

Probability of Default Rating -- Ba2

Celanese U.S. Holdings LLC

Guaranteed senior secured revolver due 2015 and letter of credit facility due 2014 at Ba1 (LGD3, 34%)

Guaranteed senior secured term loan due 2016 at Ba1 (LGD3, 34%)

$400 million guaranteed senior unsecured notes due 2021 at Ba3 (LGD4, 61%)

$600 million guaranteed senior unsecured notes due 2018 at Ba3 (LGD4, 61%)

Senior unsecured shelf at (P)Ba3

Outlook -- Positive

The principal methodology used in rating Celanese Corporation was the Global Chemical Industry Methodology published in December 2009. 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 Dallas, Texas, is a leading global producer of acetyls, vinyl acetate monomer, emulsions, acetate tow and engineered thermoplastics. Celanese reported sales of $6.8 billion for the year ended December 31, 2011. Celanese US Holdings LLC and Celanese Americas LLC are wholly owned subsidiaries and co-borrowers under the credit facilities.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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.

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

Steven Wood
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 changes Celanese's outlook to positive
No Related Data.
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