DBRS Assigns “A” Rating with Stable Trend to $980 Million Codelco Debt Issue

DBRS has today assigned a rating of “A” with a Stable trend to $980 million of 4.875% senior unsecured notes maturing November 4, 2044 (the new Codelco Notes) to be issued by Corporación Nacional del Cobre de Chile (Codelco or the Company). The net proceeds from the issuance of the new Codelco Notes are to be used for general corporate purposes, including the financing of capital expenditures.

The new Codelco Notes will be the direct, unsecured and unsubordinated obligations of Codelco, ranking pari passu with all other unsecured and unsubordinated obligations of the Company, other than certain obligations granted preferential treatment pursuant to Chilean law. They will not contain any restrictions on the amount of additional indebtedness which may be incurred by Codelco or its subsidiaries; however, the new Codelco Notes will contain certain restrictions on the ability of the Company and its subsidiaries to incur secured indebtedness.

The new Codelco Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws, and are subject to certain restrictions to transfer on resale. Application has been made to list the notes on the Official List of the Luxembourg Stock Exchange and for trading on the Euro MTF Market in accordance with its rules and regulations, although the notes have not yet been listed. The notes will be governed by the laws of the State of New York. Codelco will submit to the jurisdiction of the United States federal and state courts, located in the Borough of Manhattan in the City of New York, in respect of any action arising out of or based on the new Codelco Notes.

Codelco is the largest copper producer in the world, with proven and probable reserves that are expected to support copper production for many years. Codelco is wholly owned by the Republic of Chile (Long-Term Foreign Currency - Issuer Rating: AA (low), Stable trend by DBRS).

The Company is engaged in a large, multi-year, investment program to maintain and improve its competitive position in the copper industry. At the current level of copper prices, DBRS expects the program will continue to require external funds in addition to the new Codelco Notes and funds allowed to be retained by the Company in its normal-course relationship with the Government of Chile.

DBRS’s rating on Codelco’s Senior Unsecured Debt is based on the expectation of ongoing support from the Government of Chile. Although Codelco’s debt obligations are not generally guaranteed by the Government of Chile, the Company’s success is closely linked to industrial development in Chile and the exploitation of one of the country’s most important natural resources, providing the basis for DBRS’s expectation of support by the Government of Chile.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Mining Industry (September 2014), which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.