S&P rates Teck notes BBB

Standard & Poor's said it assigned a BBB rating to Teck Resources Ltd.'s proposed $700 million senior unsecured notes due in 2012 and 2040 (additional issuance of the 6% BBB-rated notes issued on Aug. 17).

The notes are being issued to fund a tender offer for up to $1 billion of the company's 10.75% senior secured notes outstanding due 2019.

The agency affirmed the BBB long-term corporate credit rating.

The outlook is stable.

"The ratings on Teck reflect our view of the company's satisfactory business profile for a diversified metals and mining company, which is supported by low-cost, long-lived mines and a solid reserve base that offers long-term growth potential at attractive production costs," S&P analyst Maude Tremblay said in a statement.

S&P said that Teck's credit protection measures are commensurate with the BBB rating category following the recent debt reduction.

On the other hand, profitability and cash flow generation are volatile due to the company's exposure to unpredictable base metals prices as well as a high degree of operating risk and some political risk, the agency noted.

Teck is expected to maintain an intermediate financial risk profile, with a moderate leverage target of no more than 2x adjusted debt to EBITDA, even as it undertakes acquisitions and expansion projects, the agency said.

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