Moody's Initiates Broad Credit Ratings Review of Energy, Mining Companies
01/22/2016 - Moody’s is considering whether to downgrade 175 of the world's oil, gas, mining and metals businesses on account of the ongoing commodities downturn, the credit ratings agency has announced.
As part of the review, Moody’s said it will review 120 oil and gas businesses and 55 mining and metals companies. It expects to complete the reviews by the end of the first quarter, it said, and may wind up downgrading some companies by multiple notches.
With respect to metals and mining firms, Moody’s said slowing growth in China is weakening demand for metals, iron ore and metallurgical coal.
“China’s outsized influence on the commodities market, coupled with the need for significant recalibration of supply to bring the industry back into balance, indicates that this is not a normal cyclical downturn but a fundamental shift that will place an unprecedented level of stress on mining companies,” it said.
“This review reflects the belief that deteriorating industry fundamentals require a recalibration of the global mining portfolio rated by Moody's.”
With respect to metals and mining firms, Moody’s said slowing growth in China is weakening demand for metals, iron ore and metallurgical coal.
“China’s outsized influence on the commodities market, coupled with the need for significant recalibration of supply to bring the industry back into balance, indicates that this is not a normal cyclical downturn but a fundamental shift that will place an unprecedented level of stress on mining companies,” it said.
“This review reflects the belief that deteriorating industry fundamentals require a recalibration of the global mining portfolio rated by Moody's.”
