Moody's ups Lyondell, Equistar view to positive

Moody's Investors Service said it changed the outlook on the debt of Lyondell Chemical Co. and Equistar Chemicals LP to positive due to the anticipation that financial performance in 2005 and 2006 may enable the company to greatly increase free cash flow generation and sufficiently reduce debt to levels that would support a higher rating through the cycle.

In addition, Moody's affirmed the ratings of Millennium Chemicals Inc and Millennium America Inc. (senior implied at Ba3) and raised the speculative grade liquidity rating of Lyondell to SGL-1.

Moody's said the positive outlook reflects the anticipation of a significant improvement in financial performance at Lyondell on a consolidated basis in 2005. Specifically, the key drivers of improved free cash flow include higher cash margins at Equistar and a more moderate improvement in profitability from Millennium's TiO2 and acetyls businesses, as well as Lyondell's propylene oxide business.

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