Fitch Ratings has affirmed the following ratings of Eastman Chemical Company (Eastman):

--Issuer Default Rating (IDR) at 'BBB';

--Unsecured credit facility at 'BBB';

--Senior unsecured debt at 'BBB';

--Commercial paper at 'F2';

--Short-term IDR at 'F2'.

The Rating Outlook is Stable.

Eastman's ratings incorporate the size, scale and feedstock cost advantages of the company's large vertically integrated facility in Kingsport, TN; Eastman's leading market position in cellulose acetate fibers; its reasonable leverage and credit metrics, and solid liquidity position.

Offsetting considerations center on the impact of the current global economic contraction, which has lowered demand and plant utilization across much of the chemicals sector; the potential financing risk posed by the company's proposed Beaumont gasification project; and the possibility of further restructurings in Eastman's other business lines if the current weak environment persists.

Given the recent huge decrease in energy feedstocks (with crude oil down over $100 per barrel or 70% from its summer high), many downstream customers have slowed or stopped purchases in the fourth quarter. It remains unclear how much of this is tactical (customers waiting for further price drops before stepping in) and how much is a longer-term response to reduced demand expectations. Nonetheless, Fitch anticipates the company's credit metrics to come under additional pressure in 2009.

Eastman recently decided to slow roll the FEED (Front End Engineering and Design) process for its Beaumont gasification project in order to take advantage of declining construction costs and simplify the project. Given this delay, construction is not expected to start until before the end of 2009 and run until 2012. Incremental leverage from the project is currently estimated at the 65% or higher level; however, there are several important risk mitigants for bondholders. Most important, the debt is expected to be non-recourse, project financed; as a result, credit concerns center largely on what kind of interim support the parent is required to provide to get acceptable financial terms, as well as how much support the parent entity would lend to the project outside this framework if the project were to require additional support.

For the last 12 months ending Sept. 30, 2008, Eastman's EBITDA was $945 million, while free cash flow was a negative $137 million.