Research Update: Anglo American PLC Ratings Placed On CreditWatch Negative Due To Disappointing Production Guidance

Earlier this month, global miner Anglo American PLC (Anglo) communicated its production guidance for 2023-2025, alluding to much lower volumes than previously stated. In our view, the combination of lower volumes, low prices across certain commodities, and high capital expenditure (capex) needs would put pressure on Anglo's credit metrics. However, potential upside in copper prices and the diamonds business, together with any debt-friendly decisions in early 2024, might alleviate some pressure. Therefore, we placed our 'BBB+/A-2' long- and short-term issuer credit ratings on Anglo American on CreditWatch with negative implications. We also affirmed the South Africa national scales ratings at 'zaAAA/--/zaA-1+'. The CreditWatch reflects the potential for a downgrade with the release of Anglo's annual results if credit metrics for

...- Earlier this month, global miner Anglo American PLC (Anglo) communicated its production guidance for 2023-2025, alluding to much lower volumes than previously stated. - In our view, the combination of lower volumes, low prices across certain commodities, and high capital expenditure (capex) needs would put pressure on Anglo's credit metrics. - However, potential upside in copper prices and the diamonds business, together with any debt-friendly decisions in early 2024, might alleviate some pressure. - Therefore, we placed our '###+/A-2' long- and short-term issuer credit ratings on Anglo American on CreditWatch with negative implications. We also affirmed the South Africa national scales ratings at 'zaAAA/--/zaA-1+'. - The CreditWatch reflects the potential for a downgrade with the release of Anglo's annual results if credit metrics for 2024 and 2025 are no longer commensurate with the rating. A downgrade, if any, should be limited to one notch....

Research Update