Perenti Global Ltd.

The stable outlook reflects our expectation that Perenti will continue to generate positive free operating cash flows. We also expect the group to grow its order book across its key geographies under the Ausdrill, Barminco, and African Underground Mining Services (AUMS) brands. During benign industry conditions, the group could generate an adjusted debt-to-EBITDA ratio of about 2.0x and funds from operations (FFO) to debt of about 45%. During an industry downturn, the rating could tolerate debt-to-EBITDA ratio weakening toward 3.0x and an FFO-to-debt ratio of around 30%. We believe the group has some financial flexibility to manage its credit metrics. Downward rating pressure could arise if the company's key credit metrics were to weaken, such that its adjusted debt-to-EBITDA ratio

...Perenti Global Ltd.'s smaller scale globally, material exposure to Africa, and indirect exposure to volatile commodity prices will continue to constrain the ratings. Offsetting these weaknesses are the company's leadership position in a niche market, long track record and expertise of operating in Africa, conservative financial management, and modestly diversified service offering that provides some resilience to an industry downturn. In our view, Perenti's conservative financial management will continue to support the ratings. In light of COVID-19, the company announced the deferral of its first-half 2020 interim dividend and reactivated its dividend reinvestment plan as the company focuses on capital and liquidity management during this period of uncertainty. The company has historically raised equity to support growth capital expenditure and repay debt. Perenti's conservative financial policies have provided it with greater resilience relative to peers during past commodity cycles. We...

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