Publications
Partners
Paris -Standard & Poor's ratings services placed its "BB+" long-term corporate credit rating and its "zaA" long-term South Africa national scale rating on Gold Fields [JSE:GFI], which is based in SA, on CreditWatch with negative implications.
At the same time, S&P affirmed the "B" short-term corporate credit and "zaA-2" short-term South Africa national scale ratings on Gold Fields.
The CreditWatch placement was triggered by the change in S&P's gold price assumptions and reflects the company's expectation of declines in Gold Fields' cash flow generation and credit metrics.
We believe that lower gold prices will have a significant impact on the company, because of its higher cost structure than those of its peers, especially some of its North American peers.
Nevertheless, we anticipate that the impact of lower gold prices should be partly offset by the depreciation of commodity currencies, such as the Australian dollar, South African rand, and others versus the U.S. dollar. It may also be mitigated by potential changes in the mining plans and cost-cutting initiatives that the company's management team has implemented and may further implement.
"We will resolve the CreditWatch over the next several weeks after meeting with the company's management team to discuss its action plan in light of lower gold prices and after the company reports fourth-quarter results in February," S&P said in a statement.
"If we take a negative rating action based on these discussions, the downside would likely be limited to one notch."
Spot gold prices have continued to decline and S&P expects increasing interest rates and a stronger US dollar.
"We have lowered our gold price assumptions to $1 250 per ounce in 2014 from $1 350/oz, and to $1 200/oz in 2015 from $1 300/oz," the company said.
At the same time, S&P affirmed the "B" short-term corporate credit and "zaA-2" short-term South Africa national scale ratings on Gold Fields.
The CreditWatch placement was triggered by the change in S&P's gold price assumptions and reflects the company's expectation of declines in Gold Fields' cash flow generation and credit metrics.
We believe that lower gold prices will have a significant impact on the company, because of its higher cost structure than those of its peers, especially some of its North American peers.
Nevertheless, we anticipate that the impact of lower gold prices should be partly offset by the depreciation of commodity currencies, such as the Australian dollar, South African rand, and others versus the U.S. dollar. It may also be mitigated by potential changes in the mining plans and cost-cutting initiatives that the company's management team has implemented and may further implement.
"We will resolve the CreditWatch over the next several weeks after meeting with the company's management team to discuss its action plan in light of lower gold prices and after the company reports fourth-quarter results in February," S&P said in a statement.
"If we take a negative rating action based on these discussions, the downside would likely be limited to one notch."
Spot gold prices have continued to decline and S&P expects increasing interest rates and a stronger US dollar.
"We have lowered our gold price assumptions to $1 250 per ounce in 2014 from $1 350/oz, and to $1 200/oz in 2015 from $1 300/oz," the company said.
