International credit rating agency S&P Global Ratings (Standard & Poor's Ratings Services) has announced that it has raised its long-term corporate credit rating on Australian iron ore miner Atlas Iron to 'B-' from 'CCC', with a stable outlook.
According to S&P’s statement, the upgrade of Atlas Iron's credit rating reflects the turnaround in the company’s financial position since early last year. Benefiting from rising iron ore prices, Atlas Iron's earnings and cash flows have increased materially during the first half of the financial year 2016-17, enabling the company to partially prepay some of its debt. The company now has A$118 million of US term loan outstanding, compared with A$180 million in May last year following the implementation of a debt restructure agreement with lenders. In S&P’s view, the debt reduction improves the sustainability of Atlas Iron's capital structure, making it more resilient to volatile iron ore prices.
S&P expects the company's performance to continue in the March quarter of the current financial year due to hedging contracts in place for some of that quarter's shipments.
Meanwhile, the stable outlook reflects S&P’s expectation that Atlas Iron's operations will remain steady.