Research Update: CAP S.A. Outlook Revised To Negative On Weaker Performance, 'BB+' Ratings Affirmed

CAP S.A.'s leverage metric skyrocketed towards 4.2x in 2019 because of the Guacolda 2 Port accident, which shrank iron ore dispatches. On March 6, 2020, S&P Global Ratings revised its outlook on the rating on Chilean mining company to negative from stable. We also affirmed our global scale 'BB+' issuer credit and issue-level ratings on the senior unsecured notes. The negative outlook reflects the challenges to the recovery in metrics in an uncertain scenario for commodity prices. Lower cash balance, weaker credit metrics, and a lesser headroom in the company's debt payment acceleration covenants weigh on the downside scenario. Moreover, we acknowledge that debt maturity profile is shortening, with almost 50% of debt maturing in the short term and a

...- CAP S.A.'s leverage metric skyrocketed towards 4.2x in 2019 because of the Guacolda 2 Port accident, which shrank iron ore dispatches. - On March 6, 2020, S&P Global Ratings revised its outlook on the rating on Chilean mining company to negative from stable. We also affirmed our global scale '##+' issuer credit and issue-level ratings on the senior unsecured notes. - The negative outlook reflects the challenges to the recovery in metrics in an uncertain scenario for commodity prices. Lower cash balance, weaker credit metrics, and a lesser headroom in the company's debt payment acceleration covenants weigh on the downside scenario. Moreover, we acknowledge that debt maturity profile is shortening, with almost 50% of debt maturing in the short term and a UF6 million in bonds (approximately $200 million) amortizing in the third quarter of 2021....

Research Update