Fitch downgrades Hensmile's rating due to weak profit outlook

Investing.com - Fitch Ratings today downgraded Huntsman Corporation (NYSE:HUN) and Huntsman International LLC from “BBB-” to “BB+” and assigned a negative outlook. The agency also downgraded Huntsman International’s unsecured notes from “BBB-” to “BB+”, with a recovery rating of “RR4,” and assigned a new senior secured revolving credit facility rating of “BBB-” / “RR2.”

The downgrade reflects Huntsman’s continued weak profitability, which falls short of Fitch’s expectations, and the agency’s view that the company’s performance and credit metrics will remain weak through 2026 and 2027. Fitch expects that after EBITDA, as calculated by Fitch, declines approximately 24% year-over-year in 2025, Huntsman’s earnings weakness will persist until 2027. The outlook for 2026 remains under pressure from recent softness in U.S. construction activity, rising energy and raw material costs in the U.S., and ongoing structural challenges in Europe.

Fitch expects that although operating performance will gradually improve, leverage will remain above 4.0x before 2027. Due to EBITDA at historic lows and high cyclical credit utilization, Fitch’s calculated leverage surged to 7.9x in 2025. Huntsman’s 65% dividend reduction has improved but has not eliminated the slightly negative free cash flow forecast before 2027.

The ratings are supported by Huntsman’s leading market position and strong financial flexibility. As of December 31, 2025, after refinancing its revolving credit facility, liquidity is approximately $1 billion, and Fitch forecasts that the company’s EBITDA interest coverage will average over 4.0x during this period. The company maintains a leading market position across its various segments, supported by a unique global manufacturing footprint.

The negative outlook reflects Fitch’s expectation that, given the ongoing weak market conditions, leverage will remain high at this rating level. If earnings further deteriorate or remain at low levels for an extended period, Fitch may consider negative rating actions. Conversely, if market conditions recover faster than expected, boosting the company’s deleveraging efforts, the outlook could be revised to stable.

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