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22 / 02 / 10 in
S&P, Moody's May Raise Rio Ratings
Rio Tinto Group, the world's third- largest mining company, may have its credit ratings raised by Standard & Poor Corp. ‘s and Moody's Investors Service because higher iron ore prices, National Australia Bank Ltd. said.
There is increased confidence that annual contract iron ore prices may rise by plus 40 percent this year “and this will further underwrite an upgrade,” the bank said today in a credit research note. Standard & Poor's and Moody's may increase their ratings within six months, it said.
Fitch Ratings raised its rating on Rio Tinto on Feb. 19 to “A-” from “BBB+” after the London-based company cut its debt and as China’s demand for raw materials increases.
Rio Tinto agreed last year to form an iron ore joint venture with BHP Billiton Ltd. and will receive about $5.8 billion as an equalization payment. Rio may use the money to support higher spending rather than reduce debt, Fitch said.
Credit-default swaps on Rio dropped 10 basis points to 95 basis points as of 10:55 a.m. Sydney time, according to Deutsche Bank AG. A decline indicates improved perceptions of credit quality.
Standard & Poor's has a “BBB+” rating on Rio Tinto and Moody's has a “Baa1” rating on the company.
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