S&P downgrades ratings on Freeport, ALatief<\/p>\n
JAKARTA (JP): International rating agency Standard & Poor's on
\nThursday downgraded ratings on Freeport McMoran Copper & Gold
\nInc. and PT ALatief Freeport Finance Co. BV., reflecting their
\nexposure to Indonesia's intensifying fiscal and political risks.<\/p>\n
The downgrading changed Freeport's corporate credit rating
\nfrom B minus to triple C plus; its senior unsecured debt and
\nshelf from triple C plus to triple C; subordinated shelf from
\ntriple C to triple C minus and preferred stock and preference
\nshelf from triple C minus to double C.<\/p>\n
Rating on ALatief's senior unsecured debt was also lowered
\nfrom triple C plus to triple C.<\/p>\n
\"Most notably, the downgrading reflects past close ties
\nbetween Freeport and the former regime of president Soeharto and
\nthe potential for retribution,\" Standard & Poor's said.<\/p>\n
The downgrading also mirrors concern over the rising tide of
\npopulism and uncertainty over the parliamentary and presidential
\nelections later this year.<\/p>\n
\"A new administration could seek increased wealth distribution
\nfrom foreign corporations like Freeport operating in Indonesia,\"
\nit said.<\/p>\n
Intensifying demands and also support for increased provincial
\nautonomy in Irian Jaya, where Freeport's primary asset is
\nlocated, would also likely affect the company's operation.<\/p>\n
Freeport operates a massive, low-cost copper and gold mine in
\nGrasberg complex, Irian Jaya, with copper and gold reserves
\ntotaling 51.3 billion pounds and 64.4 million ounces
\nrespectively.<\/p>\n
With copper and gold equity production in 1998 of 1.42 billion
\npounds and 2.2 million ounces respectively, Freeport is one of
\nthe largest producing copper and gold mines in the world.<\/p>\n
\"This is offset by Freeport's exposure to Indonesian political
\nrisk, volatile commodity prices and aggressive financial
\npolicies.\"<\/p>\n
Standard & Poor's said opposition from the Indonesian
\ngovernment over Freeport's recent request to increase production
\nfrom 300,000 tones of ore per day reflected the \"increasingly
\ndifficult operating environment and adverse political sentiment
\nin Indonesia\". (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/sp-downgrades-ratings-on-freeport-alatief-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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