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Chemical Finance Digest, June 13-17

3:22 PM MDT | June 21, 2011 | By VINCENT VALK

Topping the headlines last week, Grupo Alfa's DAK Americas subsidiary has agreed to buy Wellman's PET business for $185 million. In other M&A news, Russia's two biggest potash makers have completed their merger, and now say they may buy Belarus' state-owned potash company.
 
There were no new equity deals last week. The major debt deal was Ashland's issuing $3.6 billion in debt to fund the ISP acquisition. The debt will take the form 5-year and 7-year term loans, worth $1.2 billion and $1.7 billion, respectively, and a $750 million credit revolver. Moody's has rated the debt 'Baa3,' below Ashland's corporate rating. "Despite the significant increase in debt, Ashland is acquiring a specialty chemical company at an attractive multiple and credit metrics should recover to levels that would fully support the rating within the next two years," says Moody's analyst James Wilkins.
 
Moody's has also raised Brenntag's credit rating one notch, from 'Ba2' to 'Ba1.' "The upgrade of the rating was prompted by Brenntag's positive operating performance in 2010 and the early part of 2011," says analyst Gianmarco Migliavacca.

In macroeconomic news, U.S. housing starts rose 3.5% in May, to 560,000 annualized units, while industrial production inched upward by 0.1%, dragged down by weak motor vehicle production. "The manufacturing sector has entered a period of soggy growth," says IHS Global Insight economist Michael Montgomery.
 
The week ahead will see final first-quarter U.S. GDP figures released on Friday. Last month's preliminary first-quarter figure, at 1.8% growth, was unrevised from the original estimate released in April. Consensus is for a slight upward revision, to 1.9% growth.



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