Anglo American downgraded by Moody's with negative outlook

Mining giant Anglo American’s credit ratings have been downgraded by Moody’s, with a negative outlook.

In a note to clients following the close of markets on Monday, the ratings agency said it has downgraded senior unsecured ratings of Anglo American and its subsidiaries to (P)Ba3 from (P)Baa3 and converted the company's Baa3 long-term issuer rating into a Ba3 corporate family rating (CFR).

At the same time, Moody's has assigned a Ba3-PD probability of default rating (PDR) to Anglo American. The outlook on all ratings is negative. Explaining its decision, the ratings agency said the negative outlook reflects uncertainty with respect to miner’s ability to execute restructuring and to substantively 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 also expressed concern that Anglo American faces a higher business risk due to deterioration in the commodities market conditions and a “longer and more uncertain deleveraging period than previously expected.”