Recently, after Moody's downgraded the credit rating of Chilean National Copper Company (Codelco) in October last year, Fitch announced that due to the company's high debt, declining production, and reduced earnings before interest, taxes, depreciation, and amortization (EBITDA), it decided to put the company on a long-term basis. The foreign currency issuer default rating (IDR) and senior unsecured note rating were downgraded from a- to bbb+, and the company's development prospects are "stable." Fitch believes that Codelco's average leverage ratio will increase by 4.5-4.8 times in the next three years, EBITDA will decline by 4.5-5.5 times, the credit situation will deteriorate more than expected, and the company will need to spend at least US$4 billion within ten years to restore historical production levels. The agency also pointed out that Codelco's copper and lithium reserves are a long-term strategic asset of the company. The company also makes an important contribution to government fiscal revenue and is of strategic significance to the country.
Former Deputy Minister of Economy Tomás Flores said that after Fitch's credit rating downgrade this time, Codelco's interest rate will increase by 20 basis points, which means that it will increase interest expenses by about US$68 million per year, and the debt ratio will further increase. In response, Codelco responded that despite the current complex situation and multiple challenges, the decline in production is due to the company's internal operating problems and the delay of some infrastructure projects. It has now reached an inflection point, and production is expected to rebound from 2024 to 2030. Production levels of 1.7 million tons will be restored.
