Moody’s upgrades Minera Mexico’s Series B Notes

Moody’s has upgraded Minera Mexico’s senior unsecured rating on $56.4m on Series B notes due 2028 to Baa2 from Baa3. Moody’s also affirmed the Baa2 senior unsecured ratings of its parent, Southern Copper Corporation (SCC). Both have stable outlooks. The upgrade of Minera’s senior unsecured rating reflects the company’s materially reduced leverage profile following the repayment of $150m in April 2008, and improved financial metrics and free cash flow generation capacity as its operations benefit from the continuation of strong copper prices. “Given the improved performance at the mine and metallurgical operations, and the lower interest burden on the company, Moody’s expects Minera to continue to evidence acceptable coverage ratios even in a copper price downturn and despite the current lack of production from the Cananea mine, which is closed due to labor difficulties,” the agency adds. It also notes vulnerability to higher operating costs, expansion capital expenditure requirements, potential for aggressive dividend payment requirements by either SCC, or its parent, Grupo Mexico as well as the labor and political landscape in which Minera operates.