International credit rating agency Moody’s has announced that it has lowered the credit ratings of Australian mining company BHP Billiton from A1 to A3. The outlook on all ratings is negative.
Moody’s stated that the downgrade reflects the deterioration in the company's earnings and cash flow, which has led to significantly weaker credit metrics. Moody's views the current weak commodity prices and softer demand as representing a fundamental shift in the operating environment beyond a normal cyclical downturn. As a result, and notwithstanding changes to the company’s dividend policy and capital expenditure plans, which are themselves credit positive developments, Moody's expects BHP Billiton's credit metrics to remain substantially weaker over the next 12-24 months than historical levels and to be more appropriately aligned with a rating of A3.