S&P drops Valhi

Standard & Poor's said that it lowered its corporate credit rating on Valhi Inc. and its subsidiary, Kronos International Inc., two notches to CCC from B-.

At the same time, the agency said it lowered Kronos International's €400 million senior secured notes due 2013 to CCC- from CCC+, with a recovery rating of 5.

S&P noted that it removed the ratings from Creditwatch, where they were placed with negative implications on Feb. 18, pending review of the company's fourth-quarter results and prospects for 2009.

The outlook is negative.

"The downgrade reflects a potential covenant violation related to one of its facilities and its heightened concern about the company's liquidity and financial flexibility as it navigates through a challenging business environment this year," said S&P credit analyst Henry Fukuchi.

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