The mining giant Anglo American Plc’s debt has been downgraded further into junk territory by Moody’s, which cited a deterioration in commodities market conditions and doubts over how long it will take the company to reduce debt levels.
Moody’s said it does not expect Anglo American to generate enough operating cash flows to deliver substantial debt reduction in the next two years.
“Pending further announcements by the company, the rating agency believes that divestments of non-core assets would be difficult to execute in the current environment, particularly at valuations to allow de-leveraging from the current level,” Moody’s said in a statement.
Moody’s downgraded the company to (P)Ba3 from (P)Baa3, and said the outlook on the ratings was negative.
It added that the negative outlook reflected uncertainty that Anglo would be able to execute its restructuring.
The commodities slump has sent share prices of mining companies tumbling, with Anglo falling by 75% in 2015 and the FTSE mining index nearly halving.
Peer Glencore Plc, which saw its share price fall 70% in 2015, was downgraded by Moody’s to one notch above junk in December.
Anglo American announced in December that it would sell 60% of its assets and cut tens of thousands of jobs to cope with the slump.
Anglo is expected to report full-year results on Tuesday. The company’s stock closed up 5% at 393.05 pence on Monday.
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