Anglo Investment Grade Imperiled as Moody’s Weighs Cut in Rout

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The radical cutbacks unveiled this week by Anglo American Plc. may not be enough to save the mining company’s investment-grade credit rating, according to Moody’s Investor Service.

Moody’s cut London-based Anglo American to Baa3, the lowest investment grade, and placed it on review for a further downgrade, citing rising leverage amid plunging commodity prices.

The decision “reflects the exceptionally wide operating and financial review and high level of uncertainty about the future business profile of the company,” it said.

Anglo said on Tuesday it will sell assets, shut mines, shed 85,000 employees and eliminate its dividend through at least next year as Chief Executive Officer Mark Cutifani seeks to keep the company afloat as metals prices fall to the lowest in six years. The company is worst performer on the FTSE 100 index of major U.K. shares in the past week.

Moody’s expects the price of iron ore, coal and copper to fall further while calling the diamond market "weak," according to the report Thursday. Challenging markets will also slow down the pace of Anglo’s portfolio transformation, the rating company said.

(Updates with dividend cut in the fourth paragraph.)
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