Moody's rates Lyondell notes B1

Moody's Investors Service said it assigned a B1 (LGD5, 73%) rating to the $500 million of new guaranteed senior unsecured notes due 2017 to be issued by Lyondell Chemical Co.

The agency also affirmed the company' corporate family and probability-of-default ratings at Ba3; guaranteed senior secured revolving credit facility, term loan and notes at Ba1 (LGD2, 28%); guaranteed senior unsecured notes at B1 (LGD5, 73%) and senior subordinated notes at B2 (LGD6, 95%).

Proceeds from the new notes will be used to refinance $500 million of subordinated notes due in 2009; Lyondell recently received approval from existing noteholders to allow the refinancing of these subordinated notes with new unsecured notes.

The outlook is stable.

The agency said Lyondell's Ba3 corporate family rating reflects the benefits the company receives from generally solid earnings and cash flow at its refinery and higher-than-expected profitability at Equistar in 2007. Moody's also noted that crack spreads and the light-sweet/heavy-sour differential indicate that profitability at the refinery in the second quarter should be unusually strong and that the combination of improved results at the refinery and Equistar could enable Lyondell to repay more debt in 2007 than was expected.

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