London 15/02/2016 - Moody's has cut the corporate credit rating of copper and platinum producer Anglo American to 'junk' and assigned a negative outlook for the company’s new rating, stressing that the current downturn in commodities prices will be worse than previous price dips.
The downgrade to Anglo American below investment grade "reflects Moody's view that the current environment is not a normal cyclical downturn but a fundamental shift in the operating environment for the global mining sector", it said on Monday.
"With the downturn likely to be deeper and longer than previously anticipated, the rating agency believes that price risk remains to the downside," it added.
Anglo's unsecured ratings have been downgraded from Baa3 to Ba3; the company's long-term issuer rating has similarly been dropped from Baa3 to a Ba3 corporate family rating.
"The company now faces a higher business risk due to deterioration in commodities market conditions and a longer and more uncertain deleveraging period than previously expected," it said.
Moody's also placed a negative outlook on all Anglo's ratings, stating that it was uncertain that the company would be able to execute a planned restructuring process designed to reduce debt and strengthen its balance sheet.
"The outlook also captures the risk of further price compression in iron ore, copper, platinum or a delayed recovery in the diamonds market beyond 2016-17," Moody's said.
Anglo American is the latest in a line of large mining companies and traders to have their credit ratings cut to junk. On Friday American copper and oil producer Freeport-McMoRan suffered the same fate - its rating was cut by Standard & Poor's.
(Editing by Mark Shaw)