Moody's ups Minera Mexico notes to Baa3

Moody's Investors Service said it upgraded the ratings on Minera Mexico SA de CV's guaranteed senior notes to Baa3 from Ba2.

The outlook is stable.

The agency said the upgrade reflects Minera Mexico's improved financial metrics and free cash-flow generation capacity as the company benefits from the strong copper price environment and lower leverage following significant debt repayment within the last year. Additionally, given the improved performance at the mine and metallurgical operations, and the lower interest burden on the company, Moody's said it expects Minera Mexico to continue to evidence solid coverage ratios even in a copper price downturn, particularly as Minera Mexico's parent, Southern Copper, intends for all new debt to be raised at the parent level.

Moody's noted that the rating also reflects the company's exposure to higher operating costs, the potential for aggressive dividend payment requirements by either Southern Copper, or its parent, Grupo Mexico SA de CV, as well as the labor and political landscape in which Minera Mexico operates.

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