BASF should have no problem swallowing Cognis, says CreditSights

BASF should easily be able afford its €3.1 billion cash funded acquisition of smaller German Chemicals company Cognis, says credit research firm CreditSights in a new report. Although credit rating agencies reacted negatively to yesterday's announcement, CreditSights believes that BASF should be able to hang onto its current single A ratings.

For investors in single B high yield name Cognis, the acquisition is extremely positive, but has already been largely priced in, with the company’s credit default swap spreads having tightened from over 1000 basis points at the start of the year to under 200bp.

Cognis, which ???, was created in a leveraged buy-out of assets from Henkel nine years ago. It is currently rated B3 by Moody’s, B by both Standard & Poor’s and Fitch.