Fitch to rate Lyondell notes BB-

Fitch Ratings said it expects to assign a BB- rating to Lyondell Chemical Co.'s $500 million of senior unsecured notes due 2017. The agency also affirmed and withdrew its B rating on Lyondell's senior subordinated notes.

The outlook remains positive.

Proceeds from this offering are expected to fully repay the existing $500 million 10 7/8% senior subordinated notes due 2009.

Fitch said the ratings reflect the company's debt lowering, its reduced cost of borrowing and its enhanced financial flexibility. The agency said it also expects the company to use the proceeds from its sale of the inorganics business in mid-May to repay the following: Millennium America Inc.'s remaining $373 million 9¼% senior notes due 2008, Equistar Chemicals, LP's $300 million 10 1/8% senior notes due 2008 and $300 million 10 5/8% senior notes due 2011. Fitch said it expects the company to meet its debt reduction targets in 2008 and, after that, to continue to repay additional debt.

The ratings also consider the company's highly integrated business in refining, petrochemicals and performance products, Fitch said, as well as its size, liquidity and access to capital. The outlook also factors in the company's market conditions and the expectation that the company will speed up its debt repayment in the next year.

Fitch said it expects the energy and raw material prices will remain volatile but that the average price will fall and that strong operations from petrochemical and refining operations are likely to offset more cyclical businesses within the portfolio.

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