Codelco, the world’s biggest copper-producing company, had its credit rating outlook lowered to negative by Standard & Poor’s as declining prices threaten to increase leverage.
The Chilean state-owned miner’s outlook was cut from stable reflecting the risk of a rating downgrade if copper prices remain at $2.40 a pound or below, S&P wrote in a statement Tuesday. The rating was left at AA-.
“We could lower the ratings within the next 12 months if the company is not able to reduce costs or investments to offset rising leverage levels, and/or if the Chilean government postpones capital injections,” S&P wrote.
Copper futures for December delivery fell 1.5 percent to settle at $2.3015 a pound at 1:15 p.m. on the Comex in New York. Prices lost 19 percent in the four months through August.