Ratcliffe battles to keep Ineos afloat as 18bn debt pile draws in vulture funds

"Nervous bondholders have begun dumping Ineos debt at distressed prices amid a deep downturn in the global chemicals industry, opening the door for aggressive Wall Street hedge funds that specialise in exploiting corporate distress. Around £5bn of Ineos borrowings are now trading at levels that suggest investors are pricing in a serious risk of default. For Ratcliffe, it is an uncomfortably familiar moment."

"Borrowings across Ineos Group Holdings and Ineos Quattro Holdings - which together represent around two-thirds of the empire - rose by almost £3bn in the past year alone, taking combined debt beyond £18bn. Annual debt servicing costs have surged to £1.8bn, up £600m year-on-year. Bond markets have reacted swiftly. Large tranches of Ineos debt that were trading above 90 cents on the dollar in October have since slipped into the low 70s and 80s."

"Credit ratings agencies have added to the pressure. Moody's has downgraded Ineos twice since September, citing a sharp deterioration in operating performance. Turnover fell 20 per cent, while pre-tax earnings plunged 55 per cent. The agency warned of "weak debt metrics", with leverage running at 13.5 times earnings against a backdrop of overcapacity, weak demand and high"

Ineos faces an £18bn debt burden with around £5bn of borrowings trading at distressed prices that imply significant default risk. Borrowings at Ineos Group Holdings and Ineos Quattro Holdings rose almost £3bn in the past year, taking combined debt beyond £18bn. Annual debt servicing costs have risen to £1.8bn, up £600m year-on-year. Bond tranches that traded above 90 cents in October have slipped into the low 70s and 80s as short sellers increase positions. Moody's downgraded Ineos twice since September after turnover fell 20% and pre-tax earnings plunged 55%, citing weak debt metrics and 13.5x leverage amid industry overcapacity and weak demand.

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