Experimental feature

Listen to this article

Experimental feature

Angl0-American’s grip on its investment grade rating at Standard & Poor’s loosened on Monday after the rating agency warned the chances of a cut were rising.

With commodity prices under sustained pressure, S&P put the outlook on Anglo-American’s rating on ‘creditwatch negative,’ a status implying a reduction has grown more likely.

Anglo, a South Africa-based but London-listed platinum miner, is currently rated BBB- by S&P, which raised questions over how effective the miner’s move to cut its debt will be. In a statement, S&P said:

The rating actions follow the recent drop in commodity prices and the company’s recently announced measures to counter its credit metrics coming under pressure if current market conditions continue. For instance, despite the cut in Anglo’s capital expenditure (capex) budget and dividends, we expect a materially lower 2016 EBITDA to lead to negative discretionary cash flows (free operating cash flows after capex and dividends). Consequently, we can foresee an increase in Anglo’s net debt in 2016, whereas previously we assumed a reduction in the net debt position.

The move by S&P comes after twin actions last week by rival agencies Fitch and Moody’s. The former cut Anglo’s rating to junk, while the latter warned that the miner’s rating was at further risk.

Shares in Anglo were up 1.3 per cent at 296.85p in early afternoon trading in London, but are down 75 per cent this year.

Copyright The Financial Times Limited 2017. All rights reserved.

Follow the topics mentioned in this article

Follow the authors of this article

Comments have not been enabled for this article.