From S&P on BHP:
BHP Billiton Downgraded To ‘A’, Ratings Placed On CreditWatch Negative On Low Commodity Prices
• We recently lowered our price assumptions for iron ore, oil, and copper, reflecting very challenging market conditions and increased demand uncertainty over the coming years.
• Under various scenarios, we now forecast that global diversified miner BHP Billiton could see its ratio of funds from operations to debt fall to 30%-40% over 2016 and 2017, well below our threshold for an ‘A+’ rating.
• We are therefore lowering the ratings on BHP Billiton PLC and BHP Billiton Ltd. to ‘A’ from ‘A+’ and placing them on CreditWatch with negative implications.
• The CreditWatch placement reflects the possibility that we might lower the ratings by a further one notch after the group’s earnings release in late February, largely depending on the announced dividend policy and capital expenditure guidance.
And RIO:
Standard & Poor’s recently lowered its price assumptions for iron ore, aluminum, and copper, reflecting very challenging market conditions and the increased uncertainty about demand in the coming years.
• Under various scenarios, we now forecast Rio Tinto’s funds from operations (FFO) to debt could fall to 30%-35% over 2016-2017, slightly below the 35% threshold commensurate with the existing rating.
• We are therefore placing our ‘A-/A-2’ corporate issuer rating on Rio Tinto on CreditWatch with negative implications.
• The CreditWatch placement reflects the possibility that we might lower the rating by one notch after the earnings release in early February.
And let’s recall Trevor Sykes again just a few short months ago:
You wanna buy miners for yield? Pay the price.
