Rio Tinto has been placed on downgrade watch today by S&P:
Global diversified mining group Rio Tinto’s leverage has increased beyond our previous expectations.
- We see a risk that Rio Tinto’s debt may rise further in 2013-2014, unless the company makes large disposals or iron ore prices stay well above $120/tonne CFR China.
- We are revising our outlook on Rio Tinto to negative from stable and affirming the ‘A-/A-2′ corporate credit ratings.
- The negative outlook reflects the risk of a downgrade in the next 12 to 18 months, if debt increases further and adjusted FFO to debt does not improve to 40% from a relatively low 30% in 2012.
One could almost substitute Australia for Rio in this analysis.
Well that explains the amount of short interest in RIO over the last couple of days.