Following a similar move by Standard & Poor’s, Moody’s Ratings revised its outlook on Olin Corp, the parent of the Winchester ammunition brand, to negative from stable. The rating agency said the outlook change “reflects the extended through in earnings and stressed credit metrics and the potential addition of new chlor-alkali capacity in the US that could extend the downturn.”
Moody’s affirmed Olin’s ratings, including the Ba1 Corporate Family Rating (CFR), Ba1 senior unsecured ratings, and Ba1-PD Probability of Default Rating (PDR). Olin’s Speculative Grade Liquidity (SGL) Rating was changed to SGL-2 from SGL-1.
Moody’s said, “Olin’s Ba1 rating reflects its position as the largest supplier of chlor-alkali in North America, supported by access to low-cost energy, which provides a meaningful cost advantage for its operations. The rating is also bolstered by good liquidity and management’s relatively conservative financial policies, which target a Net Debt/EBITDA ratio of 2.0x over the cycle. The company’s refinancing transaction earlier this year extended its nearest debt maturity to 2029, providing more financial flexibility.
“Through the first three quarters of 2025, Olin’s Chlor Alkali Products and Vinyls segment, the largest of the company’s three operating segments, reported continued weak financial performance, despite higher EDC volumes and cost-cutting efforts. The second largest segment, Winchester, continues to face challenges due to higher raw material costs and weak commercial demand. The Epoxy segment continued to generate limited profitability due to global overcapacity and limited import duties in the U.S. and Europe. Profitability in this business is expected to remain challenged.
“Olin’s credit metrics remain stressed at the current time with Moody’s adjusted Debt/EBITDA of 4.7x and Retained Cash Flow/Debt at 12.4% for the last twelve months ended 30 September 2025. Despite the weak credit metrics, the company is expected to generate at least around $100 million of free cash flow (after dividends), giving the company some financial flexibility during this downturn. Our main concern for the rating is potential new chlor alkali capacity that could enter the market later in 2026 as OxyChem brings on a large expansion to its Battleground site in Texas. If the U.S. industrial economy doesn’t rebound, this new capacity could extend the downturn in chlor alkali earnings, which would cause us to consider the appropriateness of a lower rating.
“Olin’s credit metrics are largely tied to the performance of its largest segment, Chlor Alkali Products and Vinyls (CAPV). This business continues to demonstrate cyclical performance that periodically stresses credit metrics, despite management’s changes to the company’s marketing strategy that have significantly increased profitability over the cycle. Olin’s second-largest business, Winchester, provides limited diversification due to its size and profitability at the current time. However, it could grow large enough, through acquisitions and increased military spending, to provide a sustained and meaningful credit benefit.
“Olin has good liquidity. The SGL-2 Speculative Grade Liquidity Rating is supported by roughly $140 million in cash on hand, our expectation of free cash flow generation, and almost full availability under its $1.2 billion unrated revolving credit facility that matures in 2030. Olin also has access to a $500 million unrated accounts receivable facility maturing in November 2027, of which $470 million was utilized as of 30 September 2025. The expected cushion of compliance under its financial maintenance covenants (including a net leverage ratio test and an interest coverage ratio test) should remain sufficient over the next 12 to 18 months.
“The negative outlook reflects the concern that market conditions may become more challenging in 2026 as new chlor alkali capacity may extend the downturn in Olin’s profitability and cause its leverage to remain elevated above 3.5x.”
