The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today assigned to Air Liquide US, L.L.C. a first-time issuer rating of A with a Positive Outlook and a short-term debt rating of S-1.

Key rating drivers

The ratings are based on the guarantee provided by Air Liquide S.A. on any issuance of the financing subsidiary Air Liquide US, L.L.C. The full rationale for the guarantor Air Liquide S.A. is laid out here.

Outlook and rating drivers

As the issuer rating is derived from the parent company’s rating by virtue of its guarantee, the Outlook is also in line with that of the rated parent. The Positive Outlook reflects the expectation that Scope-adjusted debt/EBITDA* will solidify at 1.5x and below over the medium term despite increased capex and higher pressure on free operating cash flow.

An upgrade could be considered if Scope’s expectations materialise and Air Liquide S.A.’s leverage (Scope-adjusted debt/EBITDA) solidified at a level of 1.5x and below. This could be the consequence of successful efforts to lift profitability, closing the gap with US-based competitors, and/or a shareholder remuneration more aligned with cash preservation goals.

A negative rating action, such as a return to a Stable Outlook, could be considered if Scope’s expectations of a strengthened leverage were not to materialise. Further ratings pressure is deemed remote due to the solid headroom to a lower rating.

Debt ratings

Scope has assigned an S-1 rating to the short-term debt issued by Air Liquide US, L.L.C., which is aligned with the rating of Air Liquide S.A. This short-term debt rating reflects the parent’s better-than-adequate liquidity position as well as better-than-adequate access to bank funding and the capital markets.

Environmental, social and governance (ESG) factors

Scope has evaluated the rated parent’s ESG approach and considers product innovation to be a positive factor, driven by its steps in the transition towards greater green investment, exemplified by the aim to invest approximately EUR 8bn by 2035 to serve the low-carbon and renewable hydrogen markets as well as the fact that out of the 12-month investment opportunities more than 40% are focused on energy transition, hence putting a strong emphasis on the long-term sustainability of its operations. Scope believes that addressing these environmental considerations can lead to better material, resource, and process efficiency, as well as business models better focused on the circular economy. In turn, these aspects could translate into a positive impact on credit-relevant factors such as market share, diversification, and profitability.

All rating actions and rated entities

Air Liquide US, L.L.C.

Issuer rating: A/Positive, new

Short-term debt rating: S-1, new

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 16 October 2023; Chemicals Rating Methodology, 16 April 2024), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Ivan Castro Campos, Director
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 2 August 2024. 

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
© 2024 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin.