S&P cuts Teekay

Standard & Poor's said it lowered the long-term corporate credit rating on Teekay Corp. to BB from BB+ and on $350 million senior unsecured bonds maturing July 2011 to BB from BB+, and revised the recovery rating to 3 from 4.

The outlook is stable.

According to S&P, the downgrade reflects Teekay's weakened financial risk profile from the company's aggressive use of debt to finance acquisitions and expand its fleet, as well as its exposure to the volatile spot tanker industry.

Partially mitigating these risks are Teekay's market-leading and defendable position, increasing revenue contribution from more stable liquefied gas and offshore segments, a strong customer base and a young fleet, the agency noted.

For the 12 months ended June, the issuer's adjusted debt-to-EBITDA ratio weakened to 7.9 times, from 5.5 times in 2006.

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