CAP stock cut to BB- as leverage and covenant risks rise
Published on 11/01/2026 at 00:11 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWSCredit pressure meets diversification plans
- S&P Global Ratings placed CAP's ratings on CreditWatch with negative implications after lowering its issuer rating.
- Higher freight costs, weaker iron ore volumes and possible covenant pressure weigh on the outlook.
- Green steel and rare earth projects could broaden CAP's business, but S&P expects diversification to take time.
On October 29, 2026, S&P Global Ratings cut CAP's issuer rating to BB- from BB and placed the ratings on CreditWatch with negative implications. The agency also lowered ratings on the company's 2036 senior bonds and 2031 senior notes.
Credit pressure intensifies
S&P said weaker EBITDA, lower iron ore production and difficult profitability conditions had pushed leverage higher. It expects CAP's nominal EBITDA to fall to USD 339 million in 2026 from USD 460 million in 2025, while adjusted debt to EBITDA could rise to about 6.0 times from 4.5 times.
The agency expects CAP could face a covenant breach at the December measurement unless it secures a waiver. A further downgrade is possible if leverage remains above 4.0 times in 2027 or if the company cannot obtain the required waiver.
Ore cycle weighs on outlook
Higher freight rates are a direct earnings burden because most of CAP's sales use cost-and-freight agreements and the company does not hedge those costs. S&P projects 2026 freight rates of USD 36 to USD 37 per ton, compared with USD 21.8 per ton in 2025, and now assumes iron ore volumes slightly below 15 million tons.
The agency also cited the temporary operational stoppage caused by severe July rainfall. Its base case assumes free operating cash flow of about USD 23 million in 2026 and USD 7 million in 2027, limiting room to reduce nominal debt.
Strategic diversification takes time
CAP is developing a green steel partnership with Aceros AZA at Huachipato and holds an investment in Aclara Resources, which gives it exposure to rare earth elements. S&P said these initiatives may reduce dependence on iron ore over time, but they are not expected to materially diversify revenue streams in the near term.
CAP's operating profile
CAP is headquartered in Santiago, Chile, and operates across mining, industrial activities and infrastructure, with operations in Chile and Peru. Its mining business produces iron ore for export, while its industrial activities include steel solutions and metallurgical products. In regional markets, its peer set includes Gerdau in steel and Shougang Hierro Peru in iron ore, while CAP's Chilean base and integrated mining exposure give it a more focused position than larger international steel groups. The company says its strategy targets materials and solutions linked to the energy transition.
CAP company facts
- Company: CAP S.A.
- ISIN: CLP256251073
- Home exchange: Santiago Stock Exchange
- Headquarters: Santiago, Chile
- Business: Mining, industrial activities and infrastructure
- Sector: Basic Materials
Chile's broader equity market can be followed through current market reports.
More news and analyses on CAP stock are available on the company topic page.
