Fitch downgrades Dow’s credit rating amid weak demand, rising debt\n\nBy , Editor Aug 1, 2025\n\nFitch downgraded Dow’s credit rating, citing weak demand and rising debt despite strong liquidity and recent dividend cuts.\n\nDow (NYSE: DOW) is one of the world’s leading materials science companies, serving customers in high-growth markets such as packaging, infrastructure, mobility and consumer applications. Courtesy /Dow Inc.\n\nDow Inc. was downgraded by Fitch Ratings due to continued weak market conditions and rising debt, the credit rating agency announced Thursday, July 31. Watch More\n\nFitch lowered Dow’s Long-Term Issuer Default Rating (IDR) from ‘BBB+’ to ‘BBB’, and also downgraded the ratings for Dow and its subsidiary Union Carbide Corporation. The outlook remains stable, signaling Fitch’s expectation that the company’s leverage will eventually improve, but not without headwinds.\n\nThe downgrade follows a prolonged period of poor performance in key markets like construction and automotive, combined with industry-wide oversupply of ethylene — a critical building block in plastics manufacturing. Those factors have pushed Dow’s leverage near 4.0x earnings before interest, taxes, depreciation and amortization (EBITDA), a level that Fitch considers elevated.\n\nWhile Dow recently slashed its dividend by $1 billion annually, the company is still projected to generate negative free cash flow exceeding $2.6 billion in 2025, Fitch said. That figure could worsen as capital spending ramps up for Dow’s Path2Zero ethylene project in Alberta, Canada.\n\n“Without a deeper dividend cut or a material demand improvement, Dow’s EBITDA leverage will remain above 2.3x over the forecast period,” Fitch analysts wrote. “Fitch expects negative free cash flow to persist beyond 2026 unless the company delays construction under a prolonged weak chemical market.”\n\nThe credit rating agency did note several factors working in Dow’s favor, including its global reach, flexible feedstock sourcing, and access to low-cost North American natural gas. Dow is the largest chemical producer in North America and reported $43 billion in revenue in 2024. Its business is diversified across packaging, industrial intermediates, coatings, and performance materials. As of June 30, Dow had $2.4 billion in cash on hand and access to $8.4 billion in credit facilities. Major debt maturities are limited until 2027, and most of the company’s outstanding debt carries fixed interest rates, shielding it from fluctuations in borrowing costs.\n\nFitch’s forecast assumes sluggish demand through 2025, with a gradual recovery in 2026 and beyond. Revenue is expected to decline slightly in 2025 before rising by 3% to 5% annually through 2029. Margins, which have hovered near 9%, are forecast to slowly improve, reaching the low teens by decade’s end.\n\nDow’s credit metrics are currently weaker than those of peers like BASF and LyondellBasell, although its North American cost advantage supports relatively higher margins. Compared to smaller peers such as Huntsman and Olin, Dow shows better margin stability and broader market exposure.

Fitch downgrades Dow's credit rating amid weak demand, rising debt

Fitch Ratings downgraded Dow Inc.'s credit rating from 'BBB+' to 'BBB' due to weak market demand, rising debt, and elevated EBITDA leverage. The downgrade reflects challenges in key markets like construction and automotive, alongside industry-wide oversupply of ethylene. Dow, a major chemical producer, faces projected negative free cash flow and is projected to maintain a stable rating despite headwinds, with a focus on improving margins and reducing leverage.