CHICAGO (AP) -- Fitch Ratings said Friday that it has lowered its outlook for the debt of Eastman Chemical Co. to negative because of the company's planned $3.38 billion purchase of Solutia Inc.
Fitch affirmed Eastman Chemical's ratings for now. But it dropped its outlook from positive because the deal is debt-heavy. Eastman Chemical is to assume $1.34 billion of Solutia's debt and will have to issue about $3.5 billion more in debt to pay for three-quarters of the Solutia deal, Fitch said.
Taking on that debt will push Eastman's debt from the low to the high end of the range typical of its "BBB" credit rating, Fitch said.
Fitch said it would remove the negative outlook if Eastman brings its debt-to-earnings ratio down over the next year or two.
Eastman shares rose $3.29, or 7 percent, to close at $50.41 on Friday on news of the deal. After hours, they fell 34 cents to $50.07.