Moody’s Ratings has downgraded Huntsman International LLC’s senior unsecured ratings to Ba1 from Baa3, pushing the chemicals manufacturer out of investment-grade territory. The rating outlook remains negative, reflecting continued macroeconomic pressure and weak demand across core sectors.
The downgrade follows a deterioration in Huntsman’s credit profile, driven by reduced earnings, higher leverage, and diminished financial flexibility.
Key Drivers Behind the Downgrade
Moody’s identified several critical concerns:
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Adjusted debt/EBITDA surged to 5.7x at the end of Q1 2025, up from 2.1x in 2022.
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Limited visibility on demand recovery, with weak trends in construction, autos, and European industrial activity.
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Governance red flags, including aggressive dividend payouts during a downturn.
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Moody’s expects volatility in earnings and leverage to persist, with adjusted debt/EBITDA averaging around 4.0x over the cycle.
The chemical sector has been under strain for over three years, and Huntsman’s exposure to cyclical products like MDI, maleic anhydride, and epoxy resins has amplified its challenges.
Weak Global Demand and Trade Uncertainty
Huntsman’s operating environment continues to be pressured by:
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High U.S. interest rates affecting housing and construction.
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Sluggish recovery in China’s property market.
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European industrial stagnation.
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Escalating trade tensions dampening sentiment and customer orders.
Moody’s now sees 2025 as another difficult year, despite expectations of some demand normalization in 2026.
Data to Monitor with Financial Modeling Prep
To track Huntsman’s evolving financial condition and industry positioning, consider the following resources:
📉 Ratios (TTM) API:
Gain real-time insights into Huntsman’s leverage, profitability, and liquidity metrics. This is especially useful for monitoring changes in debt-to-EBITDA and interest coverage.
📆 Earnings Calendar API:
Stay informed about Huntsman’s upcoming quarterly earnings announcements to gauge how guidance and actual results evolve post-downgrade.
Outlook: A Cautious Road Ahead
Moody’s highlighted that while cyclical upturns may eventually benefit Huntsman, near-term prospects remain subdued. Suboptimal capacity utilization and continued pricing pressure may constrain recovery even if volumes pick up.
For investors, Huntsman’s downgrade to speculative grade reinforces the need for close scrutiny of its capital allocation, earnings trajectory, and ability to withstand prolonged sector headwinds.
