Environmental cleanup may hurt credit ratings

Abstract

Meeting future environmental cleanup and compliance costs may have a damaging effect on corporate credit ratings, states a report just issued by Moody's Investors Service. Corporations that handle hazardous chemicals—especially in the chemical, petroleum refining, pulp and paper, plastics, and pharmaceutical industries—are especially vulnerable. That this effect has not yet been felt may only be because the 1980s was a strong decade for most major corporations dealing with chemicals, says Moody assistant vice president Robert D. Buhr, author of the credit analysis. chemical industry is in much better shape financially than, say, the steel industry, he notes. Major environmental laws of biggest concern to the analysts are Superfund, the Resource Conservation & Recovery Act (RCRA), and the 1990 Clean Air amendments. Our feeling is that the total effect of Superfund liability isn't being felt yet, Buhr says. It will be in the 1990s. The industries of concern are somewhat cyclical, he adds, and if ...