2nd Oct 2020 09:50
(Alliance News) - Moody's Investor Service earlier this week assigned a Prime-1 short term rating to Rio Tinto Finance USA Inc, while affirming all Rio Tinto PLC's ratings.
The credit ratings agency affirmed Rio's P-1 short term ratings and A2 senior unsecured ratings. The P-1 short term ratings for Rio Tinto Finance Canada Inc, Rio Tinto Finance Ltd and Rio Tinto Finance PLC are withdrawn, Moody's noted, as these companies are no longer part of Rio's commercial paper programme.
The outlook for the miner is stable.
"The affirmation of the Rio Tinto group's ratings reflects the resiliency of the company's performance in various price environments, particularly its iron ore operations which are the driving force in revenue, Ebitda, and cash flow generation" said Carol Cowan, Moody's senior vice president and lead analyst for the Rio Tinto group.
Moody's added: "The group's excellent liquidity position also supports the ratings."
The A2 ratings for companies within the Rio Tinto group "considers a number of key attributes", Moody's said. This includes its "large scale and low cost" operations across its major segments, particularly its iron ore operations in Australia. Moody's also noted Rio's "diversity of mineral and metals exposures and leading positions in a number of these."
"Rio Tinto's operating scale, productivity enhancements, cost profile and strong balance sheet provide resilience to market volatility. This, combined with financial discipline evidenced through changes in its dividend policy and debt reduction in recent years, together with a very strong earnings performance in 2019 has allowed for meaningful improvement in the group's debt protection metrics and leverage position," Moody's added.
The credit ratings agency said aluminium and copper prices have improved from lows reached earlier in 2020 as the coronavirus spread, while iron ore prices have remained high supported by continued strong steel production in China and production issues elsewhere in the world.
"Consequently, Rio Tinto is expected to continue to maintain a strong financial profile in 2020," Moody's said.
"The company's financial metrics are strong for the rating, however the volatility in the commodities in which it participates is an important consideration."
Shares in Rio Tinto were 0.5% lower in London on Friday at 4,627.00 pence each.
By Paul McGowan; [email protected]
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