S&P: Inco, Falconbridge on watch

Standard & Poor's said it kept its BBB- ratings on both Inco Ltd. and Falconbridge Ltd. on CreditWatch with negative implications, where they were placed Oct. 11, as Inco continues to seek regulatory approvals for its proposed acquisition of Falconbridge.

Continued uncertainty stemming from the regulatory reviews aside, both companies reported strong fourth-quarter results and the prospects for continued solid performance through 2006 are good, S&P noted.

The agency added the friendly transaction faces protracted competition reviews and it could be disrupted by an alternative bid that could increase the ultimate price.

Affected ratings include Inco's corporate credit rating, lowered to BBB- from A-3, senior unsecured debt at BBB- and subordinated debt at BB+, Falconbridge's corporate credit rating, lowered to BBB- from A-3, senior unsecured debt at BBB- and subordinated debt at BB+.

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