S&P ups Consol notes

Standard & Poor's said it raised its rating on Consol Energy Inc.'s 7.875% senior notes due 2012 to BB from BB- and removed them from CreditWatch with positive implications, where they were placed on April 30. In addition, S&P affirmed all other ratings on Consol, including its BB- corporate credit rating.

The outlook is stable.

S&P said the upgrade reflects the bonds' secured status, which was mandated under its indenture following the recent completion of a $600 million secured credit facility.

The ratings reflect the company's high degree of financial leverage, which includes meaningful debt and postretirement obligations, significant capital expenditures and execution risk in increasing coal production, according to S&P.

Although its debt leverage, as measured by total debt to EBITDA for the 12 months ended Dec. 31, 2003 is relatively modest for the current rating at 2.9x, the ratio increases significantly to 6.1x when considering onerous debt-like liabilities such as unfunded pension and other postretirement employee benefit obligations, reclamation and black lung.

S&P affirmed Consol's corporate credit rating at BB-, its senior unsecured debt at BB-, its $400 million revolving credit facility at BB and its $200 million tranche loan B facility at BB.

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