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Chemical film maker

Solutia

(SOI)

boosted its second-quarter guidance by 10 cents due to improving global business conditions, but the company's debt rating was slashed by Moody's Investors Service.

Solutia now expects to earn 20 cents a share in the quarter, up from previous estimates of 10 cents a share. Analysts polled by Thomson Financial/First Call had been expecting 12 cents.

The company added that sales volumes have improved steadily with increased consumer demand, while inventories have remained relatively low throughout the supply chain. Solutia said its cost savings initiative and the strengthening euro have also helped the bottom-line results.

In a press release, Solutia said it was "encouraged by recent signs of improvement in the global economy" and it remains "focused on the areas of the company portfolio with the greatest impact on the bottom line."

Separately, Moody's Investors Service cut Solutia's long-term debt rating to Ba2 from Ba1 on liquidity concerns. Moody's said the company's liquidity has weakened because of continued delays in the refinancing of its credit facility, of which about $500 million is outstanding.

Moody's wants Solutia to term out a portion of its debt facility to improve liquidity. The company recently filed a revised $800 million shelf registration to issue secured, unsecured, and/or subordinated debt notes to term out this debt, but Moody's said its new rating of Ba2 anticipates that the company will be able to refinance its credit facility.

Shares of Solutia closed Thursday at $7.70 before both announcements.