S&P reviews Anglo American for downgrade

S&P said it placed Anglo American plc’s BBB+ issuer ratings on CreditWatch with negative implications, citing the company’s revised guidance for 2023-2025.

“Much lower volumes and low prices are pressuring Anglo's EBITDA. We find Anglo's recently announced production guidance for 2024 and 2025 to be disappointing, particularly since this trend appears evident across most of its portfolio, including copper, iron ore, met-coal, and platinum group metals (PGMs). The company anticipates a 4% decrease in overall copper-equivalent grade (CuEq) volumes in 2024, followed by a further 3% decrease in 2025,” S&P said in a press release.

Furthermore, the company’s countermeasures, which include a $500 million central cost program and a $1.8 billion cut in capital expenditures, to offset the decline are inadequate in the agency’s opinion.

S&P warned the negative watch indicates it could downgrade Anglo American a notch if credit metrics for 2024 and 2025 are no longer consistent with the rating.

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