The international rating agency Moody's has announced that Australian miner Fortescue Metals Group is being reviewed by Moody's investors service for a possible cut to its credit score because of a slump in iron ore prices.
The ratings firm may lower the company's Ba3 rating, the third-highest junk grade, after iron ore prices fell 24 percent this month. Moody's said in its statement that it sees an increased risk of a delay to capital expenditures related to the company's expansion project to increase production capacity from 55 to 155 million mt per year without additional external funding, or in the absence of a meaningful iron ore price rebound in the short-term.
"The rating action reflects the considerable constraints on Fortescue's liquidity profile due to the rapid and continuing decline in the iron ore price to levels that are below our base case expectation," stated Matthew Moore, a Moody's AVP analyst.