Fitch rates Empresas CMPC bonds AA+(chl)

Fitch Ratings said it assigned a rating of AA+(chl) to Chile-based Inversiones CMPC SA's proposed issuance of up to 7 million Unidad de Fomento of peso-denominated notes. These notes will be divided into two tranches, one of which amortizes over a 30-year period and one with a bullet maturity in 2011. These notes are unconditionally guaranteed by Empresas CMPC SA.

Fitch also affirmed Empresas CMPC's AA+(chl) national scale rating and A- local and foreign currency credit ratings and Inversiones CMPC's AA+(chl) peso-denominated bonds due 2015 and A- dollar-denominated notes due 2013.

The outlook is stable.

CMPC's investment-grade ratings reflect the company's diverse cash flows, low-cost production capabilities due to its access to inexpensive fiber, market-leading positions in a number of products and conservative financial profile, the agency said. The ratings are also supported by CMPC's ownership of 709,000 hectares of land in Chile and Argentina and the company's conservative financial management. Between 2000 and 2004, the company's total debt to EBITDA ratio averaged 1.9x and its net debt to EBITDA ratio averaged 1.3x.

Fitch said leverage is expected to climb in 2006, as the company will spend more than $600 million on capex, but leverage should begin to decline in 2007 as the company receives a full year's output from a second pulp line at Santa Fe and as capital expenditures fall back to about $300 million per year. This should allow the company to lower its total debt-to-EBITDA ratio to below 2.0x by the end of that year, the agency said.

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