S&P cuts LyondellBasell

Standard & Poor's said it lowered the long-term corporate credit rating to B from B+ on LyondellBasell Industries AF SCA and its subsidiaries Millennium Chemicals Inc., Equistar Chemicals LP and Lyondell Chemical Co.

This action follows the group's weaker-than-expected earnings for the second quarter and a more challenging business outlook for the coming quarters.

The outlook is negative.

S&P said the downgrade reflects increased financial leverage due to significantly higher raw material costs in the second quarter and weakening demand for polymers.

Ratings remain constrained by the company's high leverage after Basell's 100% debt-financed acquisition of Lyondell in 2007, the agency said, with a debt-to-EBITDA ratio expected to be about 5.5 times at year-end.

The company is highly sensitive to the petrochemical and refining cycles, S&P added.

The agency said it consider business risk profile satisfactory because it enjoys a strong global footprint and leading market positions.

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