Moody’s Review of BHP’s Credit Rating Piles On Pressure – by Alex MacDonald (Wall Street Journal – December 18, 2015)

http://www.wsj.com/

LONDON— Moody’s Investors Service said on Friday it was reviewing the credit rating of mining giant BHP Billiton Ltd. for a possible downgrade, ratcheting up pressure on the world’s largest diversified miner, amid tumbling commodities prices and a mining disaster at a BHP joint venture in Brazil.

Moody’s separately cut the rating of BHP rival Glencore PLC by a notch, to just above junk status.

The commodities rout has sent mining shares falling sharply, triggering moves by many to shore up cash through asset sales and dividend cuts. BHP, however, enjoys one of the industry’s strongest balance sheets, and its low-cost operations have helped buoy earnings, compared with many peers.

It has long enjoyed a solid, investment-grade A1 rating from Moody’s. The agency said on Friday, however, that it was reviewing whether to downgrade that to A2—still comfortably investment grade—after Moody’s lowered price assumptions for BHP-produced commodities like oil, iron ore and coal.

“The review for downgrade reflects Moody’s expectation that weak commodity prices will persist for the next several years, significantly reducing BHP Billiton’s earnings and cash flow generation,” said Matthew Moore, a senior credit officer at the agency.

For the rest of this article, click here: http://www.wsj.com/articles/moodys-review-of-bhps-credit-rating-piles-on-pressure-1450441757