S&P ups Asarco, other units to CCC+

Standard & Poor's said it assigned its CCC+/stable/-- corporate credit rating to Americas Mining Corp. and upgraded Minera Mexico SA de CV to CCC+/stable/-- from SD, Asarco Inc. to CCC+/stable/-- from D, and Southern Peru Copper Corp. to CCC+/stable/-- from CC/negative/--.

Ratings revised to CCC+ include Asarco's $100 million 7.875% debentures due 2013 and $150 million 8.5% debentures due 2025, S&P reported on its Web site.

S&P said the rating on Americas Mining Corp. reflects the company's position as the third-largest copper producer in the world and its vertical integration. But these factors are more than offset by the aggressive debt profile, cyclical industry, volatile metal prices, and lack of product and geographic diversification.

"On April 2003, AMC and its subsidiaries, MM and Asarco, successfully finished their debt restructuring, but cash flow and debt ratios remain weak," said S&P credit analyst Juan P. Becerra.

One of Americas Mining Corp.'s strategies to improve free cash flow is to reduce capital expenditures to minimum levels. During the next two years, the only subsidiary that is going to invest to increase capacity is Southern Peru Copper Corp.; the other two subsidiaries will invest in maintenance only.

S&P said it believes that in the short term, this is a good strategy, but it might not be sustainable in the medium term due to the industry's capital-intense nature.

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