S&P cuts ratings for Xstrata, Glencore; warns on ’09 profits (UPDATE)
Dec 16, 2008 | 08:00 AM
| Mick Bowen
Standard & Poor's Ratings Services (S&P) has cut ratings for Xstrata Plc and said it expects the sorry state of the global economy and the continued weakness of commodity prices to cut profits and cash flow next year.
S&P also cut its rating on trading house Glencore International AG, a major shareholder in Xstrata, due to falling metal prices, the drop in the value of its industrial investments and an expectation of lower earnings in 2009 and 2010.
S&P said it was lowering its long-term and short-term corporate credit ratings on Xstrata to BBB/A-3 from BBB+/A-2 and gave the ratings a negative outlook. "This is due to a sharp market downturn that we expect to lead to markedly lower cash flows, and—with adjusted debt of $17 billion arising from previous acquisitions—weaker leverage," S&P credit analyst Alex Herbert said in a report. "The outlook is negative."....
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