Moody's upgrades Ausdrill

Moody's Investors Service said it upgraded Ausdrill Ltd.'s corporate family rating to Ba3 from B1, along with the senior unsecured rating on Ausdrill Finance Pty Ltd. to Ba3 from B2.

The outlook is changed to stable from positive.

The upgrades reflect Ausdrill's sustained improvement in its credit profile and an expectation that earnings will continue to grow, driven by opportunities in both open pit and underground mining services in Africa, Moody's said.

Ausdrill's financial leverage, measured as adjusted debt-to-EBITDA, has improved to about 2.8x for fiscal 2017, the agency said.

Moody's said it expects the company's financial leverage to improve further to the range of 2.2x to 2.5x over the next 12 to 18 months.

Ausdrill's significant exposure to the gold sector has been a positive for the company as gold prices have held up relatively well compared to other commodities, the agency said.

Although the Australian mining services sector remains competitive, growth opportunities are starting to emerge as some of the gold miners look to increase capital expenditure at existing mines, Moody's said.

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