Fitch Puts Stirol on Negative Rating Watch.

Fitch Ratings today issued a negative ratings watch notice on Stirol (STIR: HOLD). The warning applied to Stirol’s issuer default rating (B) short-term rating (B) and senior unsecured rating (B), the latter of which applies to Stirol’s $125m Eurobond. Fitch said the warning reflected “concerns about the quality and timeliness of Stirol’s financial disclosure and the likely non-compliance with certain covenants under its debt documentations” and continued concerns about the impacts of higher gas prices. Fitch said it was waiting for audited 2005 IFRS accounts, which Stirol was supposed to provide under the terms of its Eurobond placement, and other information from Stirol about the financial impact of the January 2006 price increase. Vladimir Nesterenko: Fitch’s concerns are justified, but perhaps create an overly pessimistic impression of Stirol’s credit standing. Stirol’s preliminary 1Q06 results demonstrated adequate financial performance thanks to high global fertilizer prices. Although we expect its profitability and thus its debt-servicing ability to worsen somewhat in 2Q-3Q06, as of 1Q06 the company maintained high liquidity (with $283m cash on its books), and low leverage. The interest income that Stirol earns from its cash account enables it to easily make its debt interest payments.