S&P puts Xstrata on watch, gives loan BBB+

Standard & Poor's said it assigned its BBB+ long-term and A-2 short-term corporate credit ratings to Xstrata plc and placed the ratings on CreditWatch with negative implications, pending the outcome of the $17.1 billion acquisition of Canada-based miner Falconbridge Ltd. (BBB-/Watch Pos/A-3) and the completion of an equity issue to partly finance the transaction, which could take some months to complete.

At the same time, the BBB+ long-term corporate credit rating on Xstrata Queensland Ltd. was kept on CreditWatch with negative implications, where it was placed on May 17, following Xstrata's unsolicited takeover offer.

In addition, S&P said it assigned its BBB+ senior unsecured debt rating to the proposed up to five-year multi-currency $9.5 billion term and revolving credit facility, which will be partly used by Xstrata to finance the acquisition of Falconbridge.

This rating was also placed on CreditWatch negative, the agency said, adding that the CreditWatch principally reflects the uncertainty surrounding the timing and amount of Xstrata's planned equity issuance, which will only be finalized by Xstrata after completion.

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