Moody’s revises Fortescue to stable

Moody's Investors Service said it affirmed Fortescue Metals Group Ltd.'s corporate family rating at Ba3 and changed the outlook to stable from negative.

At the same time, the agency affirmed the senior unsecured and senior secured ratings of Fortescue's finance subsidiary FMG Resources (August 2006) Pty. Ltd. at B2 and Ba2, respectively.

The outlook on all ratings is stable.

Moody’s said the outlook change follows the announcement that the company issued a $500 million repayment notice for its 2019 senior secured term loan facility, bringing total debt repayments in the fiscal year ended June 30 to around $2.9 billion and reducing interest payments by $186 million per annum.

"The stable outlook on Fortescue's corporate family rating reflects the considerable progress that the company has made in reducing its debt levels in fiscal 2016," Moody's vice president and senior credit officer Matthew Moore said in a news release.

"The debt reduction achieved in the second half of fiscal 2016 has lowered breakeven costs and created a substantial buffer for the company to maintain leverage metrics at adequate levels for its rating, even under lower iron ore price scenarios."

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