CREDIT BATTLE FOR BHP
BHP chief financial officer David Lamont says the mining major is working with ratings agency S&P Global to avert a threat to downgrade its credit rating, declaring that the company was in the strongest financial position in its history.
The group faces a potential two notch credit rating downgrade by S&P, which said in late August the sale
of BHP’S petroleum portfolio to Woodside in an all-scrip deal would make earnings at the resources giant “slightly less diversified” than those at major rivals such as Rio Tinto, Glencore and Anglo America.
The ratings agency placed BHP’S “A” rating on Creditwatch Negative over its agreement to pursue a merger of its oil and gas with Woodside, saying the latest step in BHP’S efforts to streamline its portfolio would intensify its reliance on Pilbara iron ore and reduce the strength of BHP’S risk profile.
Speaking on a retail shareholder briefing on Thursday, Mr Lamont noted that other major ratings agencies, including Moody’s and Fitch, had said the $40bn merger of the two company’s assets would be good for BHP’S overall credit outlook.
“Next steps for us is to work with S&P. We are engaging with them, and we will be reminding them of the company‘s strategy ... and the leading industry positions we have,” he said.
S&P said it viewed BHP’S presence in the oil and gas sector as a positive.
BHP stock tumbled on Thursday as its shares went ex-dividend and amid sharp falls in the iron ore price, which dropped 6 per cent to $US143.55 ($A195.06) a tonne on Wednesday.
Its shares were down 6.9 per cent at $41.94.