Moody's affirms Anglo American at A2

Moody's Investors Service said it affirmed the A2/Prime-1 senior unsecured debt ratings of Anglo American plc and its guaranteed subsidiaries following the announcement that the group is developing plans to demerge its Mondi paper and packaging business and intends to return $5 billion in cash to its shareholders through $4 billion of share buybacks over this year and $1 billion in special dividends.

The outlook for the ratings remains stable.

The agency said its affirmation reflects the fact that Mondi contributes about 20% to Anglo's consolidated revenues and although a full demerger of the business would reduce Anglo's business and geographic diversification, Moody's views Mondi as having limited synergies with the group's core mining portfolio and as such Anglo's business risk factors are viewed as being broadly unchanged.

The stable outlook factors the inherent cyclicality of the commodity markets in which Anglo participates but also, on the other hand, Moody's expectation that the strategic initiatives currently under way will help enhance the group's focus on its core mining portfolio while allowing it to maintain a solid financial profile in line with management's conservative policy.

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