S&P cuts Basell

Standard & Poor's said it lowered the long-term corporate credit rating on Basell AF SCA to B+ from BB- and removed it from CreditWatch, where it was placed with negative implications on June 26.

This follows approval for Basell's acquisition of Lyondell Chemical Co. from Lyondell shareholders, which is expected to be completed on Dec. 20.

S&P said it also lowered the long-term corporate credit ratings on Lyondell and its related entity Equistar Chemicals LP to B+ from BB- and removed them from CreditWatch, where they were placed with negative implications on July 17.

The outlook is stable.

S&P also assigned various recovery ratings to Basell's new proposed financial structure, based on draft documentation. This structure will consist of $14.6 billion in term-loan and asset-backed facilities and $8 billion in second-lien notes and senior unsecured debt.

The downgrade reflects the substantial increase in Basell's financial debt following the acquisition, which will be 100% debt-financed and will result in a highly leveraged structure at a mature stage in the petrochemical cycle, according to the agency.

The company's new financial structure will result in a debt-to-EBITDA ratio of about 4.5 times.

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