Jan 11 (Reuters) - Shares of copper miner and oil producer Freeport-McMoRan Inc fell by as much as 20 percent on Monday, hammered by the twin blows of a slump in copper prices to six-year lows and weaker oil prices.
Ratings agency Fitch also downgraded Freeport’s rating on Friday night, citing its expectations for a prolonged slump in commodity prices and the company’s high debt levels.
Shares of Freeport, the biggest listed U.S. copper producer, fell as low as $4.31 in New York in morning trade, its weakest level since December 2000. It was last trading at $4.43, down 18.1 percent.
Shares of other copper miners, including First Quantum Minerals, and oil producers were also weaker but Freeport’s outsized debt levels makes it a riskier investment and hence its stock fall was deeper. First Quantum’s shares were down 10 percent.
Freeport’s “enterprise value could be down the exact same amount (as other copper mines) but because they have so much debt on their books it gets magnified on the equity side,” said Morningstar analyst Daniel Rohr.
At 16.5 times, Freeport has one of the highest net debt to earnings before interest, tax, depreciation and amortization(EBITDA) ratios of any of the world’s miners, according to Thomson Reuters data.
Fitch downgraded Freeport’s issuer default rating to “BBB-” from “BBB”.
Copper prices plummeted to their lowest in 6-1/2 years on Monday as large losses in Chinese equity markets reinforced tarnished prospects for growth and demand in the world’s biggest consumer of industrial metals.
Oil prices tumbled nearly 5 percent. (Reporting by Nicole Mordant in Vancouver; Editing by Bernard Orr)