Moody’s rates Capstone notes B2

Moody's Investors Service said it assigned Capstone Mining Corp. a B1 corporate family rating, B1-PD probability of default rating and SGL-2 speculative grade liquidity rating.

The agency also assigned a B2 (LGD5) senior unsecured rating to Capstone's proposed $300 million notes issue due 2022.

The outlook is stable.

Capstone plans to use proceeds from the notes issue to repay borrowings of $310 million under its existing credit facilities (used to help finance the $650 million purchase of Pinto Valley from BHP Billiton in 2013). Capstone will also arrange a new $300 million secured revolving credit facility (unrated) as part of the transaction.

Moody’s said the notes have been rated one level below the corporate family rating to reflect their contractual subordination to potential usage under the revolver.

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