http://seekingalpha.com/article/1149...

Troubled mining company Teck Cominco Ltd. (TCK) has received another blow, this time from credit rating agency Standard & Poor's.

S&P credit analyst Donald Marleau downgraded Teck's rating to "BBB-" from "BBB" with a negative outlook. Teck now has the lowest investment-grade rating that the agency offers.

Mr. Marleau said in a statement:

We base the downgrade on our view that lower commodity prices and output will likely result in weaker profit expectations, higher leverage, and heightened refinancing risk for Teck in 2009.

The downgrade reflects S&P's view of Teck's massive debt load, a result of its $14-billion acquisition of Fording Canadian Coal Trust's assets. Commodity prices have plummeted since that deal was announced, creating "elevated liquidity and refinancing risks."

To preserve its investment-grade rating in the first half of 2009, S&P said that the company must demonstrate its ability to fund maturities through "any" combination of operating cash flow, asset sales, or other sources.

The agency also noted that a downgrade to speculative (or junk) status could happen even if the company eliminates the near-term refinancing risk in 2009. That would be the case if Teck has an ongoing debt-to-EBITDA ratio of about four times. For the company to stay at "BBB-" with a stable outlook, debt to EBITDA would have to fall below three times on a sustained basis. According to S&P, that means reducing overall debt to $6-billion by the end of 2010.