A number of copper producers have found that hedging increases their debt capacity.

Question

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By hedging their copper production, producers can guarantee a certain price for their output, which reduces the uncertainty around their cash flows. This increased predictability can make lenders more willing to extend credit or loan facilities, as the producers' revenue streams become less risky. Therefore, hedging can increase copper producers' ability to take on debt, and potentially expand their operations.

A Number of Copper Producers Have Found That Hedging Increases