Fitch puts Lyondell, Equistar on rating watch evolving

Fitch Ratings said it placed the ratings of Lyondell Chemical Co. and Equistar Chemicals LP on rating watch evolving following Lyondell's announcement that the auction process to sell Lyondell Citgo Refinery LP was discontinued.

Fitch currently rates Lyondell's issuer default rating at BB-, senior secured credit facility at BB+, senior secured notes and debt at BB+ and subordinated notes at B+ and rates Equistar's issuer default rating at B+, senior secured credit facility at BB+ and senior unsecured notes at BB-.

In addition, Fitch affirmed Millennium Chemicals, Inc.'s convertible senior unsecured debt at BB and issuer default rating at B+. Millennium America, Inc.'s BB+ senior secured credit facility and term loan rating, BB senior unsecured notes and B+ issuer default rating were also affirmed.

Millennium's outlook remains stable.

The rating watch evolving status suggests that elements of a downgrade, upgrade and affirmation are present in Lyondell's current situation. Given the uncertainty of the situation and multiple possible outcomes, a downgrade may potentially be required if Lyondell agrees to purchase the remaining 41.25% interest held by Citgo and funds such a purchase with additional debt.

The affirmation of Millennium's ratings reflects Fitch's expectations that a potential sale of Lyondell Citgo Refinery or a purchase of Citgo's 41.25% interest in the company by Lyondell would not affect Millennium ratings.

The ratings also consider the cyclical nature of Millennium's commodity products, strong dividends through its 29.5% interest in Equistar, sizable debt reduction during the last 12 months and Lyondell's ownership of the company.

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