S&P lifts Fortescue Metals

S&P Global Ratings said it raised the issuer credit rating on Fortescue Metals Group Ltd. to BB+ from BB. The outlook on the long-term rating is stable.

At the same time, S&P raised the rating on the company's senior secured to BBB- from BB+ and the rating on the senior unsecured issue to BB- from B+. The recovery rating on the senior secured debt issue remains at 2 and the recovery rating on the senior unsecured debt remains at 6.

S&P said the upgrade on Fortescue follows the company's announcement of a further debt reduction of US$1 billion in December 2016. Once completed, this will bring total debt reduction to date for the year ending June 30, 2017 to around US$1.7 billion, generating an interest savings of US$64 million.

“We consider the additional debt repayment has strengthened the company's resilience to iron ore price pressure, enabling Fortescue to maintain credit metrics commensurate with the BB+ rating level even under a moderate stress scenario,” said S&P credit analyst Sam Heffernan in a news release.

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