Moody’s upgrades Fortescue

Moody's Investors Service said it upgraded Fortescue Metals Group Ltd.'s corporate family rating to Ba2 from Ba3.

Moody's also said it upgraded the senior unsecured and senior secured ratings of FMG Resources (August 2006) Pty. Ltd. to B1 and Ba1 from B2 and Ba2, respectively.

The outlook is stable.

The upgrades reflect the considerable progress that the company made in reducing its debt levels in fiscal 2016 and an expectation that it will continue to reduce debt further in 2017, Moody’s explained.

The debt reduction, in part facilitated by average iron ore prices that were higher than previous expectations for 2016, has led to a significant improvement in leverage metrics for Fortescue, the agency added.

The company's ongoing cost and debt reduction initiatives will allow it to maintain conservative financial metrics over the next 12 to 24 months under the base-case sensitivity for iron ore prices, Moody’s said.

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