Fitch Affirms PPG Industries' IDR at 'A-'; Outlook to Stable

Business Wire,  March 13, 2008  

Tags: Fitch, Microsoft Outlook, PPG Industries

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NEW YORK & CHICAGO -- Fitch Ratings has affirmed its ratings on PPG Industries, Inc. (NYSE: PPG) as follows:

--Long-Term Issuer Default Rating (IDR) 'A-';

--Senior unsecured debt 'A-';

--Short-Term IDR 'F2';

--Commercial paper 'F2'.

The Rating Outlook has been revised to Stable from Negative.

PPG has issued $1.55 billion of senior notes, comprising $600 million of five-year notes, $700 million of ten-year notes, and $250 million of 30-year notes. Proceeds from the issuance will be used to repay EUR1 billion 364-day bridge loan facility that matures in December 2008. The bridge loan was used to partially fund the acquisition of SigmaKalon in January 2008.

The affirmations reflect a geographically well-balanced company with a heightened focus on its coatings and optical businesses, consistent strong earnings and excellent cash flow. Risk factors include a higher leverage profile, the cyclicality of certain of PPG's end markets, often volatile raw materials and energy costs, and the company's exposure to asbestos litigation.

The issuance of $1.55 billion in senior notes to refinance PPG's EUR1 billion 364-day facility that matures in December 2008 eliminates the refinancing risk associated with this bridge facility. The Stable Outlook reflects Fitch's expectation that PPG will be able to improve its current credit profile, while executing a disciplined growth strategy and generating consistent free cash flow. Fitch also expects PPG to use excess free cash flow and a majority of proceeds from planned asset divestitures to pay down debt. PPG generates significant cash flow - approximately $1 billion in each of the past five fiscal years. In the past, the company has been consistent in prioritizing the uses of its cash and cash flow and Fitch expects management to maintain the same discipline going forward. Following a string of acquisitions between 1997 and 2000, PPG has paid down about $1.8 billion of debt since 2001.

Over the past decade, PPG has revamped its business portfolio to achieve faster growth, less cyclical growth, and lower capital intensity. The acquisition of SigmaKalon and the company's completed and planned asset divestitures further reflect PPG's transformation into primarily a coatings and specialty products company. Fitch expects management to remain disciplined in its growth strategy and continue to make selective acquisitions, largely to grow its coatings and optical businesses.

Founded in 1883, PPG is a global supplier of coatings, glass, fiberglass, and chemicals. The company has manufacturing facilities and equity affiliates in more than 20 countries. PPG is the world's largest producer of transportation coatings and a leading maker of industrial and packaging coatings, architectural coatings, aircraft transparencies, flat and fabricated glass, continuous-strand fiberglass, and chlor-alkali and specialty chemicals.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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