Fitch Ratings upgrades the following ratings of Freeport-McMoRan Copper & Gold Inc. (FCX) and its subsidiary Phelps Dodge:
FCX
--$1 billion Secured Bank Revolver to 'BB+' from 'BB';
--6.875% secured notes due 2014 to 'BB+' from 'BB';
--Unsecured notes due 2015 and 2017 to 'BB' from 'BB-';
--7% convertible notes due 2011 to 'BB' from 'BB-'.
Phelps Dodge
--8.75% senior unsecured notes due 2011 to 'BB' from 'BB-';
--7.125% senior unsecured debentures due 2027 to 'BB' from 'BB-';
--9.50% senior unsecured notes due 2031 to 'BB' from 'BB-';
--6.125% senior unsecured notes due 2034 to 'BB' from 'BB-'.
In addition, Fitch affirms the following ratings on FCX:
--Issuer Default Rating (IDR) at 'BB';
--$500 million PT Freeport Indonesia/FCX Secured Bank Revolver at 'BBB-';
--Convertible Preferred Stock at 'B+'.
Fitch also assigns a rating of 'BB+' to FCX's new $2.45 billion five-year term loan A. Proceeds of the loan were used to repay the $2.45 billion remaining under the term loan due March 2014. The term loan amortizes at 10% per annum with the remainder due at maturity.
The Rating Outlook remains Positive.
Fitch estimates pro forma June 30, 2007 debt at $10 billion (down from $12 billion) and latest 12 months ended June 30 EBITDA at $9 billion for total debt/EBITDA of 1.1 times (x). If copper prices remain at $3/lb on average for the remainder of the year, the year-end debt level should be reduced to about $9 billion.
The ratings reflect FCX's position as the world's second largest copper producer, its diversified operations and strong liquidity as well as the company's exposure to copper prices and its relatively high financial leverage. The outlook is for copper producers to continue to benefit from a strong pricing environment over the near term.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.