S&P rates HudBay notes B

Standard & Poor's said it assigned a B rating and 3 recovery rating to HudBay Minerals Inc.'s proposed $400 million senior unsecured notes.

A 3 recovery rating indicates 50% to 70% expected recovery in a default.

The proceeds will be used to fund general corporate purposes, including outlays for several of HudBay's larger development projects, including the Lalor mine in Manitoba and the Constancia mine in Peru, S&P said.

The company's long-term corporate credit rating is unchanged at B with a stable outlook.

The ratings reflect what is considered the company's vulnerable business risk profile and aggressive financial risk profile, S&P said.

The ratings also consider HudBay's very limited operating diversity and heavy reliance on volatile metals prices during a period of considerable growth-oriented capital expenditures, the agency said.

These weaknesses are offset somewhat by HudBay's relatively stable operating profile that features an attractive first-quartile cost position, consistent earnings generation and producing assets located in a low-risk mining jurisdiction, S&P added.

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