Moody's may cut Millennium

Moody's Investors Service said it placed the debt of Millennium Chemicals Inc. (senior implied at Ba3) under review for possible downgrade and affirmed the ratings on the debt of Lyondell Chemical Co. following the announcement that these companies have signed a definitive agreement that will result in the acquisition of Millennium by Lyondell in a stock for stock transaction.

The ratings of Equistar Chemical Co. (B1 senior implied) were also affirmed.

Ratings placed under review for possible downgrade include Millennium Chemicals' senior implied rating at Ba3, issuer rating at B, and senior unsecured convertible debt at B1, as well as Millennium Americas Inc.'s guaranteed senior secured credit facility at Ba2 and guaranteed senior unsecured notes and debentures at B1.

Ratings affirmed include Lyondell Chemical's senior implied at B1, senior secured credit facility at B1, senior secured notes and debentures at B1, issuer rating at B2, senior subordinated notes at B3, and liquidity rating at SGL-3.

The ratings of Millennium Chemicals Inc. and Millennium America Inc. have been placed under review for possible downgrade due to concerns over the impact on the company's long-term credit profile as an operating subsidiary of Lyondell.

Millennium's credit profile will be protected over the near-term due to a restrictive payments clause and other language in the indentures that will prevent distributions, or loans, to Lyondell. The review will focus on the potential impact of future distributions to Lyondell on Millennium's credit profile over the longer term - primarily the potential for elevated debt levels over the next several years, while Lyondell seeks to de-lever its balance sheet.

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