AngloGold Ashanti Ltd.’s (ANG) bond yields rose to a record after Standard & Poor’s cut the third-biggest bullion producer’s rating to junk because of a record three-month drop in the price of the metal in the second quarter.
Yields on the Johannesburg-based company’s dollar bonds due in April 2020 surged 31 basis points to 7.63 percent by 5:05 p.m. in the city. Rates on AngloGold’s debt maturing in August 2022, also denominated in the U.S. currency, climbed 40 basis points, or 0.40 percentage point, to 7.75 percent.
The company’s long-term issuer credit assessment was cut one step to BB+, S&P’s highest non-investment grade, with a stable outlook, the ratings company said in an e-mailed statement. The downgrade follows Moody’s Investors Service Ltd.’s decision on July 12 to reduce AngloGold’s rating by one level to its lowest investment grade.
“The recent severe drop in the gold price exposes South African gold miner AngloGold Ashanti,” S&P said in the statement. “We have revised downward our assessment of AngloGold’s financial risk profile.”
AngloGold on July 15 said it plans to write down its assets and stockpiles by as much as $2.6 billion, spurred by gold’s 23 percent plunge this year. The company, which seeks to sell dollar bonds this year, is also facing demands by South African unions for wages to be more than doubled for entry-level workers.
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