Fitch affirms Lyondell, Equistar

Fitch Ratings said it affirmed Lyondell Chemical Co.'s senior secured credit facility rating at B+, senior secured notes at B+, and senior subordinated notes at B-. Fitch also affirmed the B+ rating on Equistar Chemicals LP's senior secured credit facility, and the B- rating on its senior unsecured notes.

The ratings have been removed from Rating Watch negative. The outlook is stable.

Fitch said Lyondell's and Equistar's ratings were placed on Rating Watch negative on March 30, 2004 to primarily capture uncertainty in the near term for possible liquidity deterioration at Lyondell, while managing the additional cash outflows required as a result of the pending acquisition of Millennium Chemicals. Additionally, Fitch was concerned with an increase in dividends by Lyondell as a result of new shares issued to fund the acquisition and the expectation that Lyondell would not have access to cashflow generated by Millennium for at least the intermediate term.

Since then, Lyondell's financial performance has improved primarily due to very strong distributions from Lyondell Citgo Refinery. In addition, Equistar resumed distributions to its parents during the third quarter, Fitch said.

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