BHP Facing Downgrade Pressure With or Without Protected Dividend
- Deadly Brazil disaster has added to pressures on profits
- Mining giant told investors will prioritize its balance sheet
Iron ore rock.
Photographer: Andrey Rudakov/BloombergThis article is for subscribers only.
Whether BHP Billiton Ltd. scraps its progressive dividend policy or not, it risks a credit ratings downgrade as the collapse in oil and iron ore shows no sign of abating.
The price to protect BHP bonds from non-payment reached a four-year high of 132.5 basis points on Nov. 13 as the yield premium offered over swap rates surged for its debt. While the company is graded at the highest A level by the three major ratings companies, Bloomberg’s default-risk model indicates its creditworthiness is more in line with the highest BBB score, three levels lower.