S&P puts Zijin Mining on watch

S&P said the ratings for Zijin Mining Group Co. Ltd. and its dollar-denominated senior unsecured notes on CreditWatch with negative implications, citing the company’s plan to acquire a 50.1% stake in Tibet Julong Copper Co. Ltd. for RMB 3.88 billion.

“Zijin’s leverage will increase materially in 2020 and 2021 if the company acquires Julong Copper. We anticipate the company’s debt-to-EBITDA ratio would rise to 4.2x-4.7x in 2020 and 3.3x-3.8x in 2021 following the acquisition. This is significantly higher than our base-case assumption of 3.6x-3.8x in 2020 and 2.6x-2.9x in 2021, and above our downgrade trigger of 3x,” S&P said in a press release.

S&P plans to resolve the CreditWatch placement within the next 90 days, when it has greater clarity on whether Zijin’s proposed acquisition will go through.

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