Gold Fields back at investment grade following Australian growth - Moody's

Ratings agency Moody's has upgraded the credit rating of Gold Fields [JSE:GFI] to investment grade. 

According to Moody's, Gold Fields had successfully reduced its reliance on its South Deep reserves, west of Johannesburg, by upping production in Australia. 

In a ratings action announcement on Tuesday, Moody's said it had raised the gold producer's rating from Ba1 to Baa3. 

Baa3 is the lowest rung of investment grade, indicating moderate credit risk. Ba1, where the gold producer was previously rated, is the first level of non-investment grade. 

The ratings agency also upgraded the rating on Gold Fields' $1bn ($852m outstanding) senior unsecured notes, due October 7, 2020, to Baa3, from Ba1.

The noted are issued by Gold Fields Orogen Holding Limited and guaranteed by Gold Fields.

Gold Fields, headquartered in Johannesburg, is the world’s eighth-largest gold producer by production. It is listed on the JSE, as well as the New York and Swiss stock exchanges. 

Its shares were trading at R47.30 at 11.43 on Wednesday, 0.36% stronger. 

Growth in Australia 

"The upgrade reflects Gold Fields' commitment to maintain credit metrics and financial policy appropriate for an investment grade Baa3 rating as it continues growing in Australia, its largest region by production," said Douglas Rowlings, Moody's Vice President, in statement on Tuesday. "Gold Fields has continued to strengthen its credit metrics and de-risk its long-term production profile, thereby reducing its reliance on South Deep reserves in South Africa for future cash flow generation."

Moody's said the action reflected the strength of Gold Fields' mines outside South Africa, which offset the "underperformance at its South Deep mine in South Africa".

Over 47% of Gold Field's Gross Profit was generated in Australia at year end 2017. This is expected to increase above 50% as Gold Field's Gruyere project commences production in 2019,” it said in a statement.