S&P affirms Industrias Peņoles

Standard & Poor's said it affirmed its BBB- long-term corporate credit rating on the Mexican mining company Industrias Peņoles and removed the rating from CreditWatch, where it was placed on Feb. 18.

The outlook is negative.

"The rating affirmation and removal from CreditWatch reflects our view that Peņoles will be able to take advantage of the currently strong commodity price environment to term out short-term debt, obtain favorable long-term financing for the Milpillas copper project, and avoid leverage increase outside of related project debt," said S&P credit analyst Juan P. Beccara.

The actions also consider S&P expectation for meaningful debt reduction and product diversification once the Milpillas project, which will exploit particularly high-grade copper, comes on line, which is expected by late 2006.

The negative outlook represents potential downside risks to this scenario, including the pricing environment, deviations from the current financial policy in terms of debt leverage, and execution risk.

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