S&P downgrades Anglo American to junk

Standard & Poor’s said it lowered the ratings Anglo American plc, including its corporate credit ratings to BB and B from BBB- and A-3 and national scale ratings to zaBBB+ and zaA-2 from zaAA- and zaA-1.

The ratings also were removed from CreditWatch with negative implications, where they were placed in December.

A recovery rating of 3 also was assigned.

The outlook is stable.

The downgrades follow the recent revision in price assumptions for commodity prices, which indicate that the operating environment will be difficult for a prolonged period, S&P said.

Many of the company’s non-core assets now generate negative free operating cash flow, the agency said.

Also, the outlook on South Africa was recently revised to negative and the company generates a high proportion of profits in South Africa, S&P said.

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