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Codelco issues US$2B in bonds

Chile’s state copper company Codelco has issued US$2 billion in bonds in New York to refinance some of its short- and medium-term debt, and take advantage of lower interest rates.
Codelco issues US$2B in bonds Codelco issues US$2B in bonds Codelco issues US$2B in bonds Codelco issues US$2B in bonds Codelco issues US$2B in bonds

Codelco refinances with new bond issue

The company, the world's largest copper producer, aims to align its debt profile with the timelines when its structural development projects such as Chuquicamata underground, a new mine level at El Teniente, the Inca mine at Salvador, and the mine-plant transfer system at Andina, will be in full production. "These projects account for three-quarters of the expected output 10 years from now," the company said in a May 2019 presentation.

Codelco issued $1.1 billion in 10-year notes and $900 million in 30-year notes with respective coupons of 3.02% and 3.71%, the lowest it has ever obtained for each term, in an offer that was four-times oversubscribed. Its debt is rated A+/A1/A by credit ratings agencies.

"The conditions of this new placement reflect the confidence of investors in the company and its development projects," said VP administration and finance, Alejandro Rivera in a statement.

Codelco also launched an offer to purchase $639 million of its existing bonds with due dates in 2020, 2021, 2022 and 2023.

This is the third time between 2017 and 2019 that Codelco has issued long-term debt to refinance its short- and medium-term debt as the sector continues to face low copper prices, a situation perpetuating due to the US-China trade war. In August, the company sold bonds for a combined $180 million and sold a minority stake in the GNL Mejillones natural gas port terminal for $193.5 million.

Codelco, which produces about 1.8 million tonnes per year of copper, had net debt of $14.9 billion at the end of the first quarter and has a $20 billion investment plan over the next decade to revamp its mines in Chile, some of which have been producing for more than 100-years old.

In May, the company said its debt maturity profile averaged nine years and at a rate of 4.32%.