Braskem Shares Plunge Over 30% on S&P Credit Downgrade to 'B+'
The ratings agency cited concerns over the company's high leverage and cash burn amid a challenging global petrochemicals market.
Shares of Braskem S.A. (BREA), the Brazilian petrochemical giant, plummeted by more than 33% in recent trading sessions after S&P Global Ratings handed the company a significant credit rating downgrade. The ratings agency lowered its corporate credit rating for Braskem to 'B+' from 'BB-', citing a negative outlook that reflects growing concerns about the company's financial health.
The downgrade comes as Braskem grapples with a series of challenges, including . The company’s financial performance has been hampered by a downturn in the global petrochemicals market, which is currently experiencing cyclically low prices due to imbalances in supply and demand. S&P Global Ratings noted that Braskem's adjusted leverage was over 9x in 2024 and the first quarter of 2025, a level the agency deems unsustainable.
Adding to the negative sentiment, reports have emerged that institutional investor Kapitalo Investimentos Ltda. reduced its holdings in Braskem by 7.8% in the second quarter. This move by a significant investor has further fueled market anxieties about the company's future prospects.
The market's reaction to the downgrade was swift and severe, with Braskem’s stock price experiencing a sharp decline. The 'B+' rating indicates that S&P considers Braskem's debt to be speculative and subject to considerable credit risk. This could lead to for the company and may restrict its access to capital markets, further complicating its financial situation.
This is not the first time S&P has downgraded Braskem's rating in recent months. The agency had previously lowered the company's rating in May and August 2025, signaling a consistent decline in its financial stability. The persistent negative outlook from S&P suggests that further downgrades could be on the horizon if Braskem's operating and cash flow performance does not show substantial improvement.
In response to these challenges, Braskem has stated that it is implementing a series of resilience initiatives, including cost reductions and efforts to improve working capital efficiency. The company may also find some relief from recently imposed anti-dumping duties on polyethylene imports in Brazil, which could potentially boost domestic prices and volumes. However, S&P remains cautious, suggesting these measures may not be sufficient to reverse the company’s cash burn in the short to medium term. Investors will be closely watching Braskem’s upcoming earnings reports for any signs of a turnaround in the face of these significant headwinds.