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Rating Action:

Moody's reviews certain FCX ratings for possible upgrade; Phelps Dodge's ratings affirmed

29 Jun 2010

Approximately $4.6 billion of debt placed under review for possible upgrade

New York, June 29, 2010 -- Moody's Investors Service placed Freeport-McMoRan Copper & Gold's (FCX) Ba1 corporate family and probability of default ratings under review for possible upgrade. At the same time, Moody's placed the Ba2 senior unsecured ratings of FCX under review for possible upgrade. In a related rating action, Moody's affirmed FCX's Baa1 senior secured bank credit facility ratings and the Baa2 ratings on Phelps Dodge's senior unsecured guaranteed notes. To the extent the security and guarantees for the bank facilities and Phelps Dodge notes falls away under any collateral fallaway provisions in existing documents, in the event FCX's ratings are upgraded, these ratings could be downgraded.

The review reflects FCX's improved financial profile as recovery in copper markets has contributed to strengthened earnings and cash flow generation and is prompted by the reduced level of debt in the capital structure following various debt repayments made in 2010 to date.

The review will focus on the debt protection and leverage metrics of the company under a scenario whereby the level of contribution from the company's Indonesian operations is not as dominant as is currently the case. The review will assess the ability of FCX's operations outside of Indonesia to contribute to metrics that would provide acceptable debt protection measures for an investment grade rating. Incorporated in the review will be an analysis of the guarantee and security structure of the debt instruments within the company and the level of secured or guaranteed debt that would be in the capital structure going forward. The review will also focus on the company's growth capital expenditure investments and the ability to support from internally generated sources, including existing cash, as well as the company's financial management philosophy as it relates to liquidity, the use of debt in the capital structure, and shareholder returns.

On Review for Possible Upgrade:

..Issuer: Freeport-McMoRan Copper & Gold Inc.

....Probability of Default Rating, Placed on Review for Possible Upgrade, currently Ba1

....Corporate Family Rating, Placed on Review for Possible Upgrade, currently Ba1

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently Ba2

Outlook Actions:

..Issuer: Freeport-McMoRan Copper & Gold Inc.

....Outlook, Changed To Rating Under Review From Stable

Moody's last rating action on FCX was February 19, 2008 when the company's ratings were upgraded (corporate family rating to Ba1 from Ba2).

The principal methodology used in rating FCX was Moody's Global Mining Industry rating methodology published in May 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating methodologies sub-directory on Moody's website.

Headquartered in Phoenix, Arizona, FCX is the second largest global copper producer with significant production in gold and molybdenum. The company's operations are based in the U.S., Indonesia, Chile, Peru and Africa. FCX had revenue of $15 billion in 2009.

New York
Brian Oak
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Carol Cowan
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's reviews certain FCX ratings for possible upgrade; Phelps Dodge's ratings affirmed
No Related Data.
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