{"id":15662,"date":"2012-10-17T18:04:21","date_gmt":"2012-10-17T16:04:21","guid":{"rendered":"http:\/\/www.myza.co.za\/10\/text-sp-anglo-american-outlook-to-neg-bbba-2-rtgs-afrmd\/"},"modified":"2012-10-17T18:04:21","modified_gmt":"2012-10-17T16:04:21","slug":"text-sp-anglo-american-outlook-to-neg-bbba-2-rtgs-afrmd","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/text-sp-anglo-american-outlook-to-neg-bbba-2-rtgs-afrmd\/","title":{"rendered":"TEXT-S&P Anglo American outlook to neg; BBB+\/A-2 rtgs afrmd"},"content":{"rendered":"

\t\t<\/span><\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

Rationale<\/p>\n

<\/span><\/p>\n

The revision of the outlook to negative reflects a combination of:<\/p>\n

<\/span><\/p>\n

— Our view that Anglo American’s business risk profile is weakening
\nbecause of rising South African country risks. Our reassessment of South
\nAfrican country risk follows the recent series of strikes and increased
\nunderlying social tensions and inequalities, which translate into a weaker
\nbusiness and investment climate in our view. Mining companies in particular
\nmay face higher cost inflation as a result of the strikes, although this is
\nmitigated by the recent substantial weakening of the South African rand. Our
\nreassessment of country risk also follows our recent downgrade of South Africa
\nto ‘BBB\/A-2’ foreign currency and ‘A-\/A-2’ local currency with a negative
\noutlook. Anglo American’s iron ore, platinum, and coal operations in South
\nAfrica made up about 50% of its 2011 EBITDA, giving it greater exposure to the
\ncountry than peers such as Xstrata (BBB+\/Negative\/A-2) and Rio Tinto
\n(A-\/Stable\/A-2).<\/p>\n

<\/span><\/p>\n

— The risk of further deterioration of profits and cash flow, if strikes
\nin the platinum segment continue and if further strikes do not allow the
\ncompany to promptly restart its Kumba Iron ore operation after the illegal
\noccupation of the mine was brought to an end by police on Oct. 16. Kumba Iron
\nOre was alone responsible for 39% of reported EBITDA in the first half of 2012
\n(35% in 2011); and<\/p>\n

<\/span><\/p>\n

— The risk that Anglo American’s credit ratios and notably our fully
\nadjusted ratio of funds from operations (FFO) to debt may drop and stay below
\nthe 45%-50% we see as commensurate with the current ‘BBB+’ rating, as a result
\nof the lower price environment.<\/p>\n

<\/span><\/p>\n

The raising of the South Africa national scale ratings follows our revision of
\nguidelines for mapping this rating scale (see “Standard Poor’s Revises
\nMapping Guidance For South Africa National Credit Rating Scale Following
\nSovereign Downgrade,” published Oct. 15, 2012).<\/p>\n

<\/span><\/p>\n

The affirmation of the global scale ratings reflects our assessment of Anglo
\nAmerican’s financial risk profile as “intermediate” and its business risk
\nprofile as “strong,” albeit now very much in the lower part of the category.<\/p>\n

<\/span><\/p>\n

Anglo American’s intermediate financial risk includes a financial policy
\nfocused on moderate debt and robust liquidity with a long-term debt maturity
\nprofile. That said, we expect Anglo American’s current moderate debt to rise
\nin the coming years, due to substantial capital expenditures (capex) resulting
\nin negative free cash flow under our 2013 pricing assumptions. Other
\nconstraints for its financial profile include volatile cash flows, substantial
\nminority holdings in its key iron ore asset Kumba Iron Ore and its key copper
\nasset Anglo American Sur.
\n\u00a0 Continued…<\/strong><\/span><\/p>\n

<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Rationale The revision of the outlook to negative reflects a combination of: — Our view that Anglo American’s business risk profile is weakening because of rising South African country risks. Our reassessment of South African country risk follows the recent series of strikes and increased underlying social tensions and inequalities, which translate into a weaker […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[830,2370,183],"class_list":{"0":"post-15662","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-south-africa","7":"tag-news","8":"tag-reuters","9":"tag-south-africa-2","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/15662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=15662"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/15662\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=15662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=15662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=15662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}