Make Kitco Your Homepage

BHP risks losing two notches to credit rating on oil asset sale

Kitco News

(Refiles to correct day of week in first paragraph)

MELBOURNE, Aug 24 (Reuters) - BHP Group is at risk of losing two notches on its credit rating given the sale of its petroleum business will raise the miner’s dependence on its major business of iron ore, credit ratings agency S&P Global said on Tuesday.

BHP has agreed to hive off its petroleum business to Woodside Petroleum Ltd in a nil-premium merger, in return for new Woodside shares which will go to BHP shareholders, who will own 48% of the enlarged group. The sale will reduce BHP’s portfolio diversity and will raise its dependency on a single asset, the agency noted.

S&P Global said it was placing ’A’ long- and ’A-1’ short-term ratings on BHP, as well as the ’A’ issue rating on the group’s senior unsecured notes on CreditWatch with negative implications. "The CreditWatch placement indicates that we could lower our ratings on BHP by up to two notches in the coming months, based on our updated review of the strength of the group’s business risk profile, if the divestment of its petroleum assets takes place as proposed," it said in a note.

(Reporting by Melanie Burton; Editing by Krishna Chandra Eluri) +613 9286 1421; Reuters Messaging: melanie.burton.thomsonreuters.com@reuters.net))

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.