“Fundamental shift” in industry warrants ratings changes, agency says
Moody’s Investors Service says it’s eyeing most of the major players in Canada’s mining sector and oil patch for a credit downgrade amid a prolonged and “unprecedented” global commodities meltdown.
Barrick Gold Corp., Goldcorp Inc. and Teck Resources Ltd. are among the dozen miners and 19 oil producers in Canada that are being reviewed by the ratings agency as companies struggle with a steep decline in oil and metals prices driven by oversupply and slowing growth in China.
Moody’s notice Friday for 120 energy companies and 55 miners around the world is its single largest warning of potential corporate downgrades since the 2008 financial crisis.
A ratings downgrade would make borrowing more expensive for oil and metal producers. They are already cash-strapped and swimming in debt due to plummeting commodity prices.
“Multi-notch downgrades are particularly likely among issuers whose activities are centred in North America, where natural gas prices have declined dramatically along with oil prices,” said the rating agency.
Among the biggest names on the list is Calgary-based Precision Drilling, which owns and operates fleets of rigs used by oil and gas companies in Canada, the United States and other countries.
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