LONDON (Alliance News) - Moody's Investors Service on Wednesday upgraded the long-term issuer ratings of BHP Billiton Ltd and BHP Billiton PLC to A2 from A3, with a stable outlook for the Australian miner.
Moody's said the reasons for the upgrade lie in the "significant debt reduction" and large build-up of cash achieved by the company due to its conservative financial policy.
Furthermore, Moody's Senior Credit Officer Matthew Moore said that material cost reductions, lower capital expenditure needs and flexible dividends, "will increase the group's resilience to a downturn in commodity prices".
"BHP's ratings and credit profile continue to benefit from the global strength of its metals and mining portfolio and its substantial product and geographic diversity, including a now smaller, but still solid position in oil and gas," the ratings agency added.
However, despite the positive view due to BHP's outlook and exposure to a strong metals and mining portfolio in a diverse geography, Moody's believes that BHP's credit profile is balanced by the cyclical nature of the metals and mining sector.
The service expects that the prices for the commodities produced by BHP will "likely experience material volatility in the future".
Looking ahead, Moody's said it expects BHP's earnings before interest, taxes, depreciation and amortisation to reduce in the next 12 to 18 months to around USD20 billion to USD22 billion, due to production remaining flat. In financial 2018, it noted, BHP's Ebitda came in at USD23.2 billion.
