DCR Assigns BBB- Ratings To Grupo Minero Mexico's Guaranteed Senior Notes

    CHICAGO, March 27 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has
 assigned a  preliminary foreign currency rating of 'BBB-' (Triple-B-Minus) to
 Grupo Minero Mexico's S.A. de C.V.`s (GMM) Series A Guaranteed Senior Notes
 due 2008 and the Series B Guaranteed Senior Notes due 2028.
      The aggregate issuance amount for both series is US$ 500 million. DCR's
 'BBB-' (Triple-B-Minus) rating is an indication of timely payment of interest
 and principal, or in the case of an inconvertibility event, payment of
 principal within two years of the scheduled maturity date.
     DCR's rating of the transaction is provisional and subject to a final
 satisfactory legal review and receipt of the necessary legal opinions.
     The notes have been rated above Mexico's sovereign foreign currency rating
 of 'BB+' (Double-B-Plus) and below GMM's local currency rating of 'BBB'
 (Triple-B) and the Secured Export Note's (SEN) rating of 'BBB' (Triple-B). DCR
 believes that the structural features of these notes are commensurate to the
 foreign currency rating of Mexico and the rating of the notes. The main
 structural features include:
 
     *  A six-month offshore interest reserve.
     *  Benefit of the GMM SEN structure through a subordinated interest in
 its cash flow during the time the SENs are outstanding.
     *  An obligation to maintain an offshore pass-through account into which
 payments of a portion of the proceeds from export sales of the guarantors will
 be made pursuant to irrevocable payment instructions to these customers
 (during such time as Mexico is rated investment grade by at least two rating
 agencies), when the SENs are no longer outstanding.
     *  An extended amortization schedule for the payment of principal in case
 of an inconvertibility event in Mexico.
 
     The primary risk to these notes is the continuance of an inconvertibility
 event in Mexico for more than six months before the SENs are fully amortized
 or another issuance of notes similar to the SENs which is senior to these
 notes. DCR considers the likelihood of this risk to be consistent with the
 rating assigned to the notes. GMM is the leading producer and exporter of
 refined copper in Mexico. GMM's local currency rating reflects its strong
 mining assets, competitive cost structure, healthy discretionary cash flow and
 successful track record of operating in Mexico. GMM's liquidity is strong,
 including typically high cash balances, although cash holdings could be
 reduced in the event of upstreamed payments to Grupo Mexico for use in
 alternative investments. GMM's volume, productivity and processing capacity
 have all increased significantly since the early 1990s, when the bulk of its
 assets were acquired from the Mexican government. Despite a significant
 decline in the price of copper from 1996 and 1997 levels, GMM's attractive
 mining properties and efficient assets allow the company to remain profitable
 and generate cash at current prices. GMM's debt-to-capital ratio has been
 relatively stable and has been largely discretionary as a result of the
 company's large cash holdings. Proceeds from these notes will be loaned to
 GMM's parent company to refinance existing indebtedness incurred to purchase
 railroad assets being privatized by the Mexican government. These notes are
 jointly and severally guaranteed by GMM (formerly known as Medimsa) and its
 principal operating subsidiaries.
 
 
 CONTACT: Rohinton Dadina, Structured Analyst, 312-368-3123, dadina@dcrco.com or Mark Oline, Corporate Analyst, 312-368-2073, oline@dcrco.com, both of DCR; or Marco Sotomayor of DCR Mexico, 011-528-356-6880 or dcrmex@intercable.net


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