Moody's ups Equistar to SGL-2

Moody's Investors Service said it raised Equistar Chemicals LP's speculative grade liquidity rating to SGL-2 from SGL-3.

Moody's said the rating reflects Equistar's cash balance, improving outlook for free cash flow generation through 2005 and $465 million of availability at June 30 under its credit facilities. Moody's said it expects that the company's financial metrics will continue to improve and that it will generate substantial levels of free cash flow in 2005 and 2006. However, Moody's said it anticipates that the vast majority of the free cash flow generated in 2005 and 2006 will be distributed to its owners rather than used to reduce debt levels.

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