Codelco financing costs rise capitalization waiting for 2013
The corporation has been prevented from borrowing at low rates given its state company, which has hurt the performance of their roles compared to foreign mining companies of similar size
Being a state-owned company Codelco has denied the possibility of taking credit at lower interest rates than on record, at a time when the funding needs of the largest copper miner in the world are higher.
The extra yield investors demand to own Chilean company bonds due 2021 instead of notes of the same rating of BHP Billiton Ltd., has increased to a record 1.25 percentage points as speculation that the U.S. Federal Reserve reduce the purchase of assets drove investors to withdraw U.S. $ 6,900 million of debt funds emerging markets last month.
A 4.62%, Codelco is also the highest level in 15 months for Freeport-McMoRan Copper Gold Inc., the second largest producer.
While Codelco is the only major mining company shares rated ‘A1’ which holds BHP Moody’s Investors Service, the worst bond decline in developing countries since the financial crisis raises the borrowing costs of the producer state under this waiting for government approval to embark on an unprecedented expansion of U.S. $ 27,000 million.
Without increased spending on new deposits, Codelco’s production will fall more than half in both mines run out of mineral.
“No doubt it will be more difficult given the situation in the last two or three weeks,” said the head of credit strategy at Jefferies Group International, Richard Segal.
“These are tough markets,” he added.
Expense record
The 2021 Codelco bond yield rose 1.79 percentage points since early May, to a record 4.62% on June 21. This compares with an increase of one percentage point of the notes of BHP, the largest mining company in the world valuable.
Average yields mining companies index from Bank of America Corp. rose 0.68 percentage points over the same period, while Freeport 2022 notes rose 1.38 percentage points.
The mining index from Bank of America reached a record low yield of 3.26% in January, after falling 6.74 percentage points from a peak of December 2008. In February, Codelco announced plans to invest over U.S. $ 5,000 million this year to maintain its status as largest copper producer.
Codelco has refrained from longer-term debt than their larger rivals. One reason is that they should expect the Finance Minister Felipe Larrain, respond to a proposed three-year investment and decide what percentage of their profits from 2012 can preserve the company.
Larraín has until June 30th
The company turned for the last time the debt market on July 10, two weeks after Larraín approve the proposal last year. Codelco sold $ 1,250 million 10-year bond at 165 basis points over Treasuries of the United States.
Source: La Tercera
