16th Feb 2016 06:49
LONDON (Alliance News) - Ratings agency Moody's on Monday downgraded its rating on miner Anglo American PLC to junk territory, expressing concerns about further problems in its bulk commodities operations and expressing doubts about its ability to complete the divestments it needs to make.
Moody's downgraded its rating on Anglo to Ba3 from Baa3 with a negative outlook.
Anglo is set Tuesday to publish its results for 2015 along with further details on its massive restructuring programme, which will see it reduce its total assets by around 60%.
The ratings agency said it sees a risk of further deterioration in conditions for Anglo American's bulk commodities business, even as it expects weak production currencies, such as the South African rand and Brazilian real, to help cushion profitability for the group by keeping costs down.
However, Moody's said the divestment of non-core assets by Anglo American, part of a push to cut its debt pile, may prove tough to execute in the current environment.
In addition, Moody's said the downgrade reflects its view the current environment in commodities markets is "not a normal cyclical downturn, but a fundamental shift in the operating environment for the global mining sector."
"With the downturn likely to be deeper and longer than previously anticipated, the rating agency believes that price risk remains to the downside, given global economic uncertainties and slowing growth in China," Moody's added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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