Standard and Poor's Raises Credit Ratings of Three Large Mining Companies

Strategic Insights -

Standard and Poor's has boosted the credit ratings of three major mining companies, citing improved market conditions and strengthening balance sheets. The ratings agency raised the long-term credit ratings of Anglo American PLC, Rio Tinto PLC, and Xstrata PLC by one notch each, reflecting their ability to reduce debt through high free cash flow and improve liquidity and maturity profiles. The upgrade is expected to benefit the companies' access to capital and ability to invest in new projects, with Anglo American aiming to commission two large projects in the next two years and Rio Tinto planning to spend £13 billion in capital expenditure this year.

Key Takeaways:

  • Standard and Poor's raised the credit ratings of Anglo American PLC, Rio Tinto PLC, and Xstrata PLC by one notch each, citing improved market conditions and strengthening balance sheets.
  • Anglo American's long-term credit rating was raised to BBB+ from BBB, while Rio Tinto's was raised to A- from BBB+, and Xstrata's was raised to BBB+ from BBB.
  • The upgrade is expected to benefit the companies' access to capital and ability to invest in new projects, with Anglo American planning to commission two large projects in the next two years and Rio Tinto aiming to spend £13 billion in capital expenditure this year.
  • Xstrata's business risk profile was revised to "strong" due to its improved cost profile and diversified asset portfolio.
  • The credit rating upgrades reflect the companies' ability to generate positive free operating cash flow through the cycle, despite planned increases in capital expenditures.

Statistics:

  • Anglo American's long-term credit rating was raised to BBB+ from BBB.
  • Rio Tinto's long-term credit rating was raised to A- from BBB+.
  • Xstrata's long-term credit rating was raised to BBB+ from BBB.
  • Anglo American plans to commission two large projects in the next two years.
  • Rio Tinto plans to spend £13 billion in capital expenditure this year, up from £11 billion the previous year.

Sources:

  • Dow Jones Commodities News Select via Comtex
  • Standard and Poor's statement (no specific date provided)
  • Comtex SmarTrend Alert (no specific date provided)