S&P downgrades Teck

Standard & Poor’s said it lowered the long-term corporate credit and issue-level ratings on Teck Resources Ltd. to B+ from BB.

The agency also said it lowered the rating on the company’s senior unsecured notes to B+ from BB. The 3 recovery rating, indicating 50% to 70% expected default recovery, is unchanged.

The outlook is negative.

The downgrades primarily follow the significant downward revision to the price assumptions for the core commodities produced by the company, S&P said, and corresponding reduction in the estimate of its prospective earnings and cash flow.

The negative outlook primarily considers the depressed market conditions in Teck’s core commodity segments, which include metallurgical coal, copper and zinc, which are expected to persist or weaken further in 2016 and into 2017, the agency said.

This is expected to result in higher-than-expected leverage for the company, heightened free cash flow deficits and liquidity concerns, S&P said.

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