S&P rates Teck notes BB-

S&P said it affirmed the B+ long-term corporate credit rating on Teck Resources Ltd.

The agency also said it assigned a BB- rating and 2 recovery rating to the company's proposed $1 billion of senior unsecured notes. The 2 recovery rating indicates 70% to 90% expected default recovery.

The new notes, along with the company’s bank facilities, will be guaranteed by subsidiaries that account for the majority of the company's assets, S&P said.

The outlook is negative.

S&P also said it affirmed the B+ rating on Teck's existing senior unsecured notes. But the agency revised the recovery rating on the notes to 4 from 3.

A 4 recovery rating indicates 30% to 50% expected default recovery.

These notes are now subordinated to the proposed notes and Teck's bank facilities, which reduces recovery prospects in a simulated default scenario, the agency explained.

The planned bond issuance is considered as positive to Teck's liquidity position, S&P said, but not to an extent that warrants a rating action.

The company's estimated core credit ratios are weak for the ratings and heavily dependent on sustained improvement in metallurgical coal, copper, and zinc prices to reach levels considered commensurate with the ratings, the agency added.

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