S&P lowers BHP Billiton, notes

Standard & Poor's lowered its long-term corporate credit ratings on BHP Billiton plc and BHP Billiton Ltd. to A from A+. The agency placed both the long-term ratings and the short-term A-1 ratings on CreditWatch with negative implications.

S&P also lowered the rating on BHP Billiton's senior secured notes to A from A+ and the rating on the subordinated notes to BBB+ from A-. The agency placed the issue ratings on the debt instruments issued or guaranteed by BHP Billiton on CreditWatch negative.

The rating actions follows S&P’s recent update to its price assumptions for most commodities, including key elements of BHP Billiton's portfolio such as iron ore, copper, and coking coal. Metal prices have come under pressure because of fears of lower demand from China, and excess supply remains an issue.

Moreover, particularly relevant for BHP Billiton, the oversupply of crude oil in the market results in very weak oil and Henry Hub gas prices, which S&P now believes will last over the foreseeable future, putting further pressure on its balance sheet.

Under revised capex and dividends assumptions, S&P now projects FFO to debt to be between 30% and 40% in 2016 and in 2017.

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