JOHANNESBURG (miningweekly.com) – Credit ratings agency Fitch on Wednesday lowered Anglo American’s credit rating to junk status with a negative outlook, two days after Moody’s Investors Service made a similar assessment.

Fitch reduced the London-listed company’s rating to BB+ from BBB- in the wake of Moody's citing doubts over debt level reduction speed on its (P)Ba3 from (P)Baa3 downgrading, also with a negative ratings outlook.

The Fitch downgrade of Anglo’s long-term issuer default rating was published a day after Anglo sought to reassure investors on Tuesday that it was taking adequate action to deal with the global commodities downturn by unveiling a plan to raise an additional $3-billion to $4-billion by selling mining operations and ending up an appreciably smaller diamonds, platinum and copper entity.

Anglo CEO Mark Cutifani commented to journalists on Tuesday that companies always had to be a little cautious and respectful of the rating agencies.

“They have talked about execution. We believe we have set ourselves up to be successful, hence the range of assets that we’ve identified for sale, and we think we’re in pretty good shape,” Cutifani said in the conference call from London in which Creamer Media’s Mining Weekly Online participated.

Anglo CFO René Médori reminded journalists that Anglo had given notice last year of its expectation that its credit ratings would be lowered.

“Back in December, I flagged that we were expecting to be downgraded below investment grade,” Médori recalled, adding that the downgrading would neither impact the company operationally nor financially.

“We have no covenant on our bonds and we have plenty of liquidity,” he said, adding that the company had $7-billion worth of cash on hand and more than $5-billion of bank finance headroom extending to 2020.

Moreover, Anglo did not intend going to the market for the next two to three years.

Fitch said in a media release to Creamer Media’s Mining Weekly Online that it believed the reduced scale of the group together with the current weak credit metrics and uncertainty related to the timing and execution of the restructuring plan/asset sales were more commensurate with a 'BB' category rating.

Earlier, Moody's made the point that it did not expect Anglo to generate enough operating cash to deliver substantial organic debt reduction, citing the sale of noncore assets as being difficult to execute in the current depressed environment.

Fitch added that the negative outlook primarily reflected uncertainty about the success of Anglo’s asset-disposal programme in light of the large number of mining assets currently available for purchase in what had become a buyers' market.

It raised the question of whether assets that were marginally profitable or lossmaking would be able to attract purchase prices acceptable to Anglo management and warned that failure to sell assets, as currently envisaged, would result in the current credit metrics being sustained for an extended period.

Anglo is reducing its employee complement from the current 128 000 to 50 000, with 68 000 people currently employed by the assets earmarked for disposal.

Anglo, which suffered a pre-tax loss of $5.6-billion in the 12 months to December 31, has suspended dividend payments to the end of 2016.