Moody’s rates Teck notes B1

Moody's Investors Service said it assigned a B1 (LGD 2) rating to Teck Resources Ltd.'s proposed $1 billion aggregate principal amount of guaranteed senior unsecured notes due 2021 and 2024.

The agency also said it downgraded the company’s existing senior unsecured debt ratings to Caa1 (LGD 5) from B3 (LGD 4), reflecting its position in the capital structure behind the new notes and credit facilities with respect to claim on collateral at the guaranteeing subsidiaries level.

The company's B3 corporate family rating, B3-PD probability of default rating and SGL-2 speculative grade rating are unchanged, Moody’s said.

The outlook remains negative.

The proceeds from the new notes will be used to refinance existing notes due in 2017, 2018 and 2019 through Teck's announced tender offer, Moody’s said.

The ratings are driven primarily by expected high leverage and continuing material free cash-flow consumption due to sizable capital expenditure requirements and exposure to weak commodity prices, the agency said.

Providing an offset are the diversity and scale of its business, low geopolitical risks and good average cost position, Moody’s said.

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