Fitch rates Fortescue Metals loan BBB-

Fitch Ratings said it assigned a final rating of BBB- to FMG Resources (August 2006) Pty. Ltd.'s $5 billion guaranteed secured term loan due 2017.

The loan is unconditionally joint and severally guaranteed by Fortescue Metals Group Ltd. and its subsidiaries currently representing more than 95% of the group's consolidated total assets and net income.

The credit agreement contains certain clauses usual for this type of loan.

The loan size has been increased to $5 billion from $4.5 billion since the expected rating was assigned Oct. 2, Fitch said. The increase in the issue size did not affect the final rating, which is in line with the expected rating, the agency said.

The proceeds will be used to repay and refinance existing debt, including the buy-back of Leucadia National Corp. notes for $715 million and existing bank debt.

The secured loan has significantly enhanced Fortescue's liquidity, Fitch said.

The ratings reflect the company's position as a high-margin producer, which is supported by its low production costs relative to peers and proximity to its customers in Asia, the agency said.

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