Moody's puts BHP Billiton rating on review for possible downgrade

The ratings agency said the review was prompted by the precipitous decline and persistent weakness in commodity prices and follows the recent downward revisions of its oil and natural gas assumptions on 15 December and its base metals and bulk commodity prices on 8 December.

"The review for downgrade reflects Moody's expectation that weak commodity prices will persist for the next several years, significantly reducing BHP Billiton's earnings and cash flow generation" said Matthew Moore, a Moody's vice president and senior credit officer.

"As a result we expect BHP Billiton's credit metrics to deteriorate beyond our expectations for the current rating, absent further countermeasures".

Moody’s does not expect commodity prices to shift significantly in 2016 from the levels in late 2015, which have touched multi-year lows for several commodities.

For the calendar years 2016 and 2017, Moody's current price assumptions for major commodities produced by BHP Billiton include Brent crude averaging $43 and $48 per barrel copper averaging $2.15 and $2.35 per pound.

To retain its existing A1 rating, Moody's expects BHP to keep its adjusted debt to EBITDA ratio at below 1.5x.

At 1120 GMT, BHP Billiton shares were 1.1% higher at 707.70p.