Bulletin: South32 Ltd.'s Proposed Share Buyback Has No Impact On Ratings

MELBOURNE (S&P Global Ratings) March 27, 2017--S&P Global Ratings today said that South32 Ltd.'s (BBB+/Stable/A-2) US$500 million, on-market, share buyback would have no immediate impact on the ratings, given the company's large rating buffer. In our view, South32's strong balance sheet differentiates the company from other investment-grade mining peers. It provides the company with a good rating buffer to pursue growth opportunities or withstand any deterioration in the current operating environment. The modest size of the proposed share buyback retains a cushion in the company's financial metrics to accommodate potential weakness in commodity prices. We would expect South32's adjusted funds from operations (FFO) to debt to be more than 45% and its free operating cash flow to remain positive, to

...MELBOURNE (S&P Global Ratings) March 27, 2017--S&P Global Ratings today said that South32 Ltd.'s (###+/Stable/A-2) US$500 million, on-market, share buyback would have no immediate impact on the ratings, given the company's large rating buffer. In our view, South32's strong balance sheet differentiates the company from other investment-grade mining peers. It provides the company with a good rating buffer to pursue growth opportunities or withstand any deterioration in the current operating environment. The modest size of the proposed share buyback retains a cushion in the company's financial metrics to accommodate potential weakness in commodity prices. We would expect South32's adjusted funds from operations (FFO) to debt to be more than 45% and its free operating cash flow to remain positive, to maintain the '###+' rating if the company undertakes potential expansion activities. Based on our forecasts, we estimate that South32's lease-adjusted FFO to debt will be above 100% for the year...

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