Fitch rates Codelco notes A-

Fitch Ratings said it assigned an expected rating of A- to Corporacion Nacional del Cobre de Chile's (Codelco) proposed unsecured notes.

The amount for the proposed transaction is $1.3 billion for a 30-year tenor.

The proceeds will be used to primarily refinance upcoming bond maturities.

Codelco initiated a tender offer for up to $1.9 billion to purchase their notes due in 2020, 2021, 2022, 2023 and 2025.

The tender offer will allow Codelco to improve its debt maturity profile and strengthen its liquidity, the agency said.

The new bond issuances will not increase net leverage ratio, Fitch said.

The rating of A- is one notch lower than the sovereign rating of Chile based on the agency's criteria for rating government-related entities.

Codelco is fully owned by the sovereign and is by far its single largest contributor, Fitch said.

The government's incentive to support the company was demonstrated after recent capitalizations laws, the agency added.

But Fitch said it estimated the impact of Codelco's theoretical default to be limited since copper is not essential for the country's subsistence and the company's overall contribution to the state has decreased to less than 5% of the central government's revenues.

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