S&P affirms Phelps Dodge ratings, removes ratings from CreditWatch on end of Inco bid

Standard & Poor's Rating Service said Thursday it removed copper producer Phelps Dodge Corp. from CreditWatch and affirmed all its ratings, after the company canceled its merger attempt with Canadian nickel miner Inco Ltd.

On July 18, the credit-rating agency put Phoenix-based Phelps Dodge's ratings on CreditWatch with negative implications, after the company sweetened the cash portion of its bid for Inco.

Looking ahead, S&P credit analyst Thomas Watters said Phelps Dodge would likely need to find a conservatively financed acquisition to warrant a potential ratings upgrade. A downgrade could occur if copper prices decline significantly while mining costs remain near current levels, he said.

"Given the expectation of high copper prices during the next one to two years, we expect Phelps to generate very strong operating and financial performance," he wrote. Bankruptcy