S&P may upgrade Teck

Standard & Poor's said it affirmed Teck Resources Ltd.'s BB+ long-term corporate credit rating and placed it on CreditWatch with positive implications.

"Our CreditWatch placement follows Teck's rapid pace of debt reduction in the second half of 2009 from a combination of proceeds from asset sales and improved profitability amid solid commodity prices," S&P analyst Donald Marleau said in a statement.

The agency said it expects commodity prices to result in substantial operating cash flows, allowing the company to continue reducing debt through 2010.

Teck's adjusted debt-to-EBITDA ratio improved to about 2.4x at Dec. 31, 2009 from a peak of 4.6x shortly after the late 2008 acquisition, the agency said.

S&P said the company's key profit drivers have competitive cost profiles that support solid cash flow and profitability at most points in the volatile metals price cycle but that Teck also operates higher-cost mature assets that have elevated operating leverage leading to more earnings volatility.

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