Moody’s cuts Codelco to A3

Moody's Investors Service said it downgraded the long-term senior unsecured rating for Corporacion Nacional del Cobre de Chile (Codelco) to A3 from A1.

At the same time, the agency lowered Codelco's baseline credit assessment (BCA) to ba2 from baa1.

The outlook remains negative. These actions conclude the review initiated on Jan. 21.

Moody’s said the downgrades reflect its view that the company's credit profile and operations remain solid, but incorporate the impact of the volatility and downward pressure of copper prices in Codelco's credit metrics, lower earnings expectations and the large expansion phase with substantial capital expenditures needed to increase production and reverse the declining trend in ore grades. Copper prices in the range between $2 to $2.5/lb will maintain Codelco's credit metrics, particularly margins, leverage and interest coverage, under pressure.

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