Bloomberg on First Quantum in Panama

As the Canadian copper company First Quantum Minerals Ltd. gears up for their new project, Cobre Panama, Bloomberg weighs in, saying bondholders should benefit.

With First Quantum’s production in Panama ramping up this year with the Cobre Panama plant in addition to the mines in Penonome, Panama is quickly becoming the companies main country of operation, with Zambia seemingly taking the back burner. The move, as stated by Bloomberg in their article Deep in a Panama Rainforest, First Quantum Bondholders Spy Prize bondholders should benefit bondholders since Panama stronger credit rating then Zambia. 

“Panama is investment grade and Zambia isn’t, so there should definitely be an improvement in the bonds as the ramp up of Cobre Panama progresses," First Quantum President Clive Newall said in an interview.

First Quantum’s stock has seen significant losses in recent months due to a fall in the price of copper and trade tensions, but could the move to Panama turn things around? This market report claims it’s possible. 

“It seems pretty clear to us that these bonds will be considered Panama country of risk in the near future, prompting a repricing,” said Nicholas Leach, a fund manager at CIBC Asset Management in Toronto. “This move could also significantly increase the market for these notes.”

First Quantum’s $1 billion of notes due March 2026 have posted about a 15 percent loss on a total return basis since their February 2018 sale, according to data compiled by Bloomberg.

Panama is rated above investment grade by S&P Global Ratings.

Cobre Panama is expected to produce 150,000 tons of copper in 2019 abd 270,000 tons to 300,000 tons in 2020 as stated by Newall. 

Cobre Panama is a 120 kilometers project located west of Panama City. The large open-pit copper mine is a concession of 13,600 hectares of dense Panamanian rainforest.