Anglo American's Rating May Be Cut to Junk by S&P on Metals Rout

  • Announcement follows cut by Fitch, Moody’s last week
  • The miner's shares have slid this year amid commodities slump

Can Oil Companies Weather the Global Glut?

Anglo American Plc’s credit rating may be cut to junk unless the rout in metals prices reverses, Standard & Poor’s said.

“If current prices persist, the company would be likely to see an increase in the net-debt position in 2016,” S&P said in a statement Monday. It said it may cut the miner’s rating within about two months unless metals recover or it sees “sufficiently predictable benefits” from Anglo’s counter measures.

Chief Executive Officer Mark Cutifani is struggling to staunch a slump in Anglo’s value as metals trade near the lowest in about six years. The company said Dec. 8 that it will sell assets, shut mines, shed 85,000 employees and eliminate its dividend through at least next year. It’s shares have slumped 76 percent this year.

The S&P announcement comes after Fitch Ratings Ltd. last week cut London-based Anglo’s rating to the lowest investment-grade level and Moody’s Investors Service downgraded the miner and put it on review for a cut to junk. S&P said it could lower the rating by one notch if weak commodity prices persist. 

“However, taking into account the group’s strong liquidity and management’s commitment to strengthening credit metrics, we will need to further assess its full range of counter measures,” it said.

Anglo shares fell 3 percent by 3:04 p.m. in London, after earlier gaining as much as 4.1 percent. The stock is this year’s worst performer in the U.K.’s FTSE 100 Index.

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