Codelco pays heavy price for ramping up debt burden to fund over-budget projects

Codelco is paying a heavy price for increasing its already heavy debt load to finance late and over-budget projects that are needed to maintain its status as the world’s biggest copper supplier.

Chile’s state-owned miner sold two tranches of debt worth a total of $2-billion last week at 230 basis points and 235 points above US Treasuries, a wider spread than on its existing notes. The company’s debt burden is by far the largest among major copper producers tracked by Bloomberg, at about 5.8 times earnings before one-time items.