Methanex Corporation -- Moody's rates Methanex's new notes Ba1

The following summarizes the ratings:

Methanex Corporation

Ratings assigned

$300 million senior unsecured notes due 2019 -- Ba1 (LGD4, 61%)

Existing Ratings:

Corporate Family Rating -- Ba1

Probability of Default Rating -- Ba1

$150 million senior unsecured notes due 2015 -- Ba1 (LGD4, 61%)

$250 million senior unsecured notes due 2022 -- Ba1 (LGD4, 61%)

Shelf (senior unsecured debt) -- (P)Ba1

Outlook -- Positive

RATINGS RATIONALE

The bond proceeds will partially fund the $550 million cost of relocating an existing idle methanol plant from Chile to Geismar, Louisiana. Methanex announced in November that it received the required air permits for the operation of the plant in Louisiana from the EPA and State of Louisiana. It expects to start producing methanol at the new site by the end of 2014. The relocation and construction spending will like result in Methanex not producing positive free cash flow in 2013 and the first half of 2014. If the firm elects to relocate a second plant from Chile to Geismar, a project the company has said it is evaluating, then we would not expect Methanex to produce positive free cash flow until 2015.

Methanex's ratings reflect its significant market share as the world's largest methanol producer, geographic diversity, strong cash balances and liquidity, and logistics assets and benefits associated with selling high volumes of methanol. The methanol industry pricing has supported attractive profit margins in 2011-2012. The company has secured new gas contracts to support operations of all its capacity in New Zealand, allowing it to restart idle capacity. The limited new industry capacity that has been announced is expected to be absorbed by the market without disrupting methanol pricing. The company's relatively conservative financial philosophy for a Ba1 issuer also benefits the rating. The ratings are tempered by the single commodity petrochemical product portfolio, cyclical nature of pricing and demand in the methanol market, inconsistent supplies of natural gas feedstock. The ratings are further limited by the exposure to changes of foreign government policies (e.g., potential political unrest in Egypt) and the high amount of operating leases which materially increases adjusted debt.

The outlook on Methanex's ratings was moved to positive in February 2012, reflecting Methanex's strong financial strength credit metrics supportive of a higher rating, its improved methanol production asset profile, expectations that investment opportunities currently under consideration by the company will add to the company's production capacity and favorable industry conditions.

The rating could be upgraded if the company continues to be supplied with sufficient attractively priced natural gas to operate its plants, continues to smoothly operate its Egyptian plant, makes substantial progress towards relocating a methanol plant from Chile to the US Gulf Coast and is expected to return to generating substantial positive free cash flow. Significant negative free cash flow resulting from lower than expected operating cash flow or heightened spending on additional investment opportunities would temper our view of the rating.

The principal methodology used in rating Methanex Corporation was the Global Chemical Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Methanex, based in Vancouver, British Columbia, is the world's largest producer of methanol, its only product. Methanex operates methanol production facilities located in Canada, Chile, Egypt, New Zealand and Trinidad. The 1.3 million metric ton p.a. plant in Egypt (owned by a joint venture in which Methanex has a 60% interest) started production in March 2011 and is the latest addition to its asset base. The company restarted its Canadian (Medicine Hat) plant in 2011; it had been closed since 2001. The company reported revenues of $2.7 billion for the twelve months ended September 30, 2012.

REGULATORY DISCLOSURES

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James Wilkins Vice President - Senior Analyst Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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