...Sovereign Ownership: Corporacion Nacional del Cobre de Chile's (Codelco) ratings reflect its 100% ownership by the government of Chile and its strategic importance to the country. Chile's new administration announced a capitalization measure intended to finance part of Codelco's ambitious capex program for the next four years ending in 2018. The capex program is essential to maintain current copper volume output levels in light of declining ore grades at its aging mines, with a long-term aim of increasing annual output to above 2 million metric tons. Increasing Pressure on Credit Profile: Codelco exhibits a weakened credit profile as a result of higher debt levels used to finance its large capex program. Codelco's net debt/EBITDA ratio for the LTM ended June 30, 2014, was 2.3x compared with 2.0x as of December 2013. This ratio includes Codelco's nonrecourse debt with Mitsui. The higher leverage ratios have also been exacerbated by lower copper prices of around USD3.00/lb (USD3.16/lb in...
