Barclays_Global_Credit_Research_Global_Chemicals_Still_Searching_for_the_Floor

This document is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendations offered in this report.Please see analyst certifications and important disclosures beginning on page 25.Global ChemicalsStill Searching for the FloorThe global chemicals cycle is weakening beyond priorexpectations. The Braskem situation heightens caution forother global petchem credits and the need for additional duediligence and/or a higher risk premium. We assess risksacross regions and recommend trades to optimize exposure.  Overview• China creates supply problem, plus weak demand: China’s relentless capacity expansionhas created a global oversupply in chemicals chains including TiO2, PVC, and ethylene andpolyethylene, flooding export markets and driving down prices across regions. This isexacerbated by global demand under pressure across end-markets including constructionand durable goods. • Braskem case study highlights sector risks: Braskem’s rapid credit deterioration highlightsthe risks of operating in oversupplied chains and relying on high-cost naphtha feedstock.• LatAm credits under downgrade risk overhang: Latin American chemical credits faceheightened risk from oversupply and weak spreads, with downgrades likely if earningsdisappoint.• North America credits' EBITDA deterioration and underperformance: US investment-grade chemical producers like DOW and LYB are seeing EBITDA collapse and rating underpressure as the cycle remains deeply oversupplied. US high-yield chemical credits areunderperforming, especially those exposed to chains like TiO2 swamped by excess Chinesecapacity and weak demand.• The European problem, BASF's self-help measures and Ineos' underperformance:Europe’s chemical sector is losing competitiveness in basic chemicals production mostly, dueto high energy costs, strict carbon policy regulations, and persistent overcapacity, forcingplant closures and asset sales. In IG, BASF's diversification, proactive restructuring andnoncore asset sales are helping to defend its low-A ratings despite weak upstream marginsand therefore spreads have held up well. In contrast, HY spreads are decompressing due tooperational weakness, inflated leverage, and a wave of rating downgrades, especially withinIneos Group Holdings and Ineos Quattro.FICC ResearchCredit Research16 October 2025SIGNATUREEdward Brucker, CFA+1 212 526 4435edward.brucker@barclays.comBCI, USAbanikash Rayaji, CFA+1 212 526 9843abanikash.rayaji@barclays.comBCI, USSamantha Kost+1 212 526 4007samantha.kost@barclays.comBCI, USJames Alistair Cawthorpe+ 44 (0) 20 8773 5888james.cawthorpe@barclays.comBarclays, UKRidita Noboni44 (0) 20 7773 6122ridita.noboni@barclays.comBarcl