NEW YORK (Standard & Poor's) Aug. 6, 2007--Standard & Poor's Ratings Services
conducted a review of the trends affecting pensions and other postretirement
obligations in the U.S. chemicals sector and their implications for credit
quality, according to an article published today. The article is titled "
Improvement In U.S. Chemical Sector’s Pension Funding Shortfall Bodes Well For
Credit Quality."
"Like many established industrial sectors of the U.S. economy, the
chemicals industry has a long history that carries with it a number of
business advantages and challenges," said Standard & Poor's credit analyst
Kyle Loughlin.
The article stated some of the sector's competitive advantages, including
leading technology, well-established infrastructure, and entrenched customer
relationships. It also asserted that this rich past can result in meaningful
legacy costs of various forms, including sizable promises to retirees to
provide pension and health care benefits for years to come.
"For many of the 70 U.S. chemical companies that Standard & Poor's
rates, liabilities related to postretirement benefits represent a meaningful
debt-like obligation," added Standard & Poor's credit analyst Jonathan Nus.
Just last month, Dow Chemical Co. announced plans to "modernize" its U.S.
retirement program, joining others, such as DuPont (E.I.) De Nemours & Co., in
taking steps to modify their existing compensation programs.
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