BHP Billiton Put on Review by Moody’s for Potential Downgrade

23 Dec 2015 | Author: | No comments yet »

BHP Billiton Put on Review by Moody’s for Potential Downgrade.

BHP Billiton’s (NYSE:BHP) credit rating has been put on review for downgrade by Moody’s Investors Service, highlighting how the commodities rout is wreaking havoc on miners, even those with relatively strong balance sheets. “The review…reflects Moody’s expectation that weak commodity prices will persist for the next several years, significantly reducing BHP Billiton’s earnings and cash flow generation” said Matthew Moore, a senior credit officer. London – Britain’s top equity index steadied on Friday, outperforming the broader European stock market and propped up by commodities shares, which advanced as prices of major industrial metals and oil rose.Most major equities gauges in Europe are pulling back today following yesterday’s rally in the wake of the first rise in interest rates in the US in almost a decade.

BHP Billiton plc (LON:BLT) received a GBX 670 ($10.10) price objective from equities research analysts at Independent Research GmbH in a research report issued on Friday, AnalystRatings.NET reports. Moody’s does not expect commodity prices to shift significantly in 2016 from the levels in late 2015, which have touched multi-year lows for several commodities. For the calendar years 2016 and 2017, Moody’s current price assumptions for major commodities produced by BHP Billiton include Brent crude averaging $43 and $48 per barrel copper averaging $2.15 and $2.35 per pound. Mining and energy companies yesterday missed out on the post-Fed party as the dollar advanced and put even further pressure on battered commodities prices. Anglo American jumped 5.8 percent, the top gainer in the blue-chip FTSE 100 index, while Rio Tinto, BHP Billiton and Fresnillo were up 1.2 to 2.2 percent. “A squeeze higher in the mining sector… is preventing a complete sea of red on the FTSE this morning as we see a mild bounce in copper prices,” Brenda Kelly, head analyst at London Capital Group, said. “Recent history would indicate that these large swings in the share prices of commodity producers have been characteristic of a downtrend and attempts to catch the falling knife has not been without casualty,” Kelly said.

UBS analysts said that the mining sector’s outlook remained challenging, with valuations not compelling and free cashflow remaining negative or struggling to cover dividends. In Tokyo, the Nikkei Stock Average NIK, -1.90% jumped then swung nearly 2% lower after the Bank of Japan unexpectedly announced additional measures to its three-year old monetary easing program. Four analysts have rated the stock with a sell rating, fourteen have given a hold rating and nine have assigned a buy rating to the company’s stock. BHP Billiton Plc is engaged in exploration, development, production, processing and marketing of minerals, in respect of iron ore, metallurgical and energy coal, copper, aluminum, manganese, uranium, nickel, silver and potash, and exploration, development, production and marketing of conventional and unconventional oil and gas.

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