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Moody’s cuts BHP’s debt rating

4th March 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Investment risk ratings agency Moody’s Investors Service on Thursday cut the world’s largest miner BHP Billiton’s debt rating from A1 to A3, mentioning the deterioration in the company's earnings and cash flow, which has led to significantly weaker credit metrics.

The outlook for all ratings of BHP and its subsidiaries was ‘negative’.

Moody’s said that current weak commodity prices and softer demand represented a fundamental shift in the operating environment beyond a normal cyclical downturn.

Despite positive changes to the company’s dividend policy and capital expenditure plans, Moody’s expected BHP’s credit ratings to remain substantially weaker over the next 12 to 24 months.

BHP had recently announced changes to its long-standing ‘progressive dividend’ that called for dividend levels to be maintained or increased over time, to a payout-based dividend that would allow the company to align dividend payments to the earnings profile of the company. The policy aimed to pay a minimum of 50% of underlying attributable profit in dividends.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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