S&P rates Consol Mining first lien debt B+, second lien CCC+

S&P said it assigned its B corporate credit rating to Consol Mining Corp. The outlook is stable.

S&P also assigned a B+ issue-level rating to the company's first-lien debt. The recovery rating on the debt is 2, reflecting an expectation of substantial (70%-90%; rounded estimate: 70%) recovery in the event of default.

At the same time, S&P assigned a CCC+ issue-level rating to the company's second-lien notes. The recovery rating on the debt is 6, reflecting an expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of default.

S&P said the company’s business risks reflect expectations of profitability that would be among the very highest among its peers. And S&P is forecasting EBITDA margins exceeding 35%. In addition to the company's low-cost longwall mining operations, CMC's reserve profile in the Northern Appalachian basin provides the highest quality coal, the average energy content approaches 13,000 Btu per pound, along with access to key logistics infrastructure.

These strengths are weighed primarily against the limited growth prospects in the coal industry as it faces ongoing competitive pressure from low-priced natural gas and other substitutes, the agency added.

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