Bulletin: South32 Ltd.'s Strong Balance Sheet Provides Rating Stability Amid Volatile Commodity Markets

MELBOURNE (Standard&Poor's) Feb. 26, 2016--Standard&Poor's Ratings Services said today that South32 Ltd.'s (BBB+/Stable/A-2) results for the six months ended Dec. 31, 2015, are in line with our rating expectations. In our view, despite the tough trading conditions affecting the company's main commodities, the company's strong balance sheet provides a good rating buffer to withstand the current challenging operating environment. We consider its strong balance sheet to be the key factor that differentiates South32 from other investment-grade mining companies. However, the recent sharp fall in prices across its key commodities has weakened its earnings and partly reduced the large rating buffer. To maintain the 'BBB+' rating, we would expect South32's adjusted funds from operations (FFO) to debt

...MELBOURNE (Standard & Poor's) Feb. 26, 2016--Standard & Poor's Ratings Services said today that South32 Ltd.'s (###+/Stable/A-2) results for the six months ended Dec. 31, 2015, are in line with our rating expectations. In our view, despite the tough trading conditions affecting the company's main commodities, the company's strong balance sheet provides a good rating buffer to withstand the current challenging operating environment. We consider its strong balance sheet to be the key factor that differentiates South32 from other investment-grade mining companies. However, the recent sharp fall in prices across its key commodities has weakened its earnings and partly reduced the large rating buffer. To maintain the '###+' rating, 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. Assuming no further material weakening in commodity prices, we forecast the company's adjusted FFO to debt to be slightly...

Bulletin