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Rating Action:

Moody's places Rio Tinto group ratings and all subsidiary ratings (A3 sr. unsecured) on review for upgrade

01 Nov 2018

New York, November 01, 2018 -- Moody's Investors Service ("Moody's") placed all ratings (A3 senior unsecured and P-2 short-term) of the Rio Tinto group rated entities (Rio Tinto) on review for upgrade. The review results from the strengthening Rio Tinto's metrics attributable to its debt reduction in recent years under its liability management program, the reduction in costs from the group's focus on productivity and logistics, which helps to mitigate cost creep being seen in input costs. A recovery in prices over 2017 and 2018 has also benefitted the company.

On Review for Upgrade:

..Issuer: Rio Tinto (Commercial Paper) Limited

....Backed Senior Unsecured Commercial Paper, Placed on Review for Upgrade, currently P-2

..Issuer: Rio Tinto (Commercial Paper) plc

....Backed Senior Unsecured Commercial Paper, Placed on Review for Upgrade, currently P-2

..Issuer: Rio Tinto America Inc.

.... Backed Issuer Rating, Placed on Review for Upgrade, currently A3

....Backed Senior Unsecured Commercial Paper, Placed on Review for Upgrade, currently P-2

..Issuer: Rio Tinto Finance (USA) Limited

....Backed Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)A3

....Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently A3

....Backed Senior Unsecured Shelf, Placed on Review for Upgrade, currently (P)A3

..Issuer: Rio Tinto Finance (USA) plc

....Backed Senior Unsecured Medium-Term Note Program, Placed on Review for Upgrade, currently (P)A3

....Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently A3

....Backed Senior Unsecured Shelf, Placed on Review for Upgrade, currently (P)A3

..Issuer: Rio Tinto Finance Canada Inc

....Backed Senior Unsecured Commercial Paper, Placed on Review for Upgrade, currently P-2

..Issuer: Rio Tinto Finance Limited

....Backed Senior Unsecured Commercial Paper, Placed on Review for Upgrade, currently P-2

..Issuer: Rio Tinto Finance plc

.... Backed Issuer Rating, Placed on Review for Upgrade, currently A3

.... Backed Senior Unsecured Commercial Paper, Placed on Review for Upgrade, currently P-2

.... Backed Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently A3

..Issuer: Rio Tinto Limited

.... Issuer Rating, Placed on Review for Upgrade, currently A3

..Issuer: Rio Tinto plc

.... Issuer Rating, Placed on Review for Upgrade, currently A3

Outlook Actions:

..Issuer: Rio Tinto America Inc.

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Rio Tinto Finance (USA) Limited

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Rio Tinto Finance (USA) plc

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Rio Tinto Finance plc

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Rio Tinto Limited

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Rio Tinto plc

....Outlook, Changed To Rating Under Review From Stable

RATINGS RATIONALE

The review will consider the Rio Tinto group's asset base, commodity diversification, cost structure, and strategic growth objectives. Given the volatility in the key markets in which the group participates, the review will also assess credit metrics and cash flow at the low end of our price sensitivities to determine the resilience of the group's performance through different price points. A further focus of the review will be the group's commitment to a single A financial policy with a strong discipline in capital investments and M&A activity.

Rio Tinto's A3 senior unsecured rating considers a number of key attributes of the group including its large scale and low cost operations, diversity of mineral and metals exposures and leading positions in a number of these markets, and geographical diversity. A further factor is the delveraging undertaken over the last several years contributing to improved debt protection metrics. These actions together with changes in the dividend policy and a lower capital expenditure run rate have better positioned the group to exhibit stronger performance than seen in the last downturn.

Factors that could lead to an upgrade include ability to sustain debt/EBITDA of no more than 1.5x, an EBIT margin of at least 25%, and EBIT/interest of at least 11x. Other considerations would include continued maintenance of a solid liquidity profile, a manageable debt maturity profile and a clear commitment to a single A financial policy with strong discipline in capital investments and M&A activity.

The principal methodology used in these ratings was Mining published in September 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The Rio Tinto group ranks as one of the world's largest diversified mining groups from both a geographic and product perspective with substantial interests in iron ore, ranking among the top three in the seaborne markets, bauxite, alumina and aluminum, and copper, and important holdings in uranium, diamonds, and industrial minerals (borax, titanium dioxide feedstock, salt). Rio Tinto operates under a dual listed company structure, allowing both shareholders of Rio Tinto plc (UK) and Rio Tinto Limited (Australia) an interest in a single economic entity. For the twelve months ended June 30, 2018 the Rio Tinto group generated revenues of roughly $40.6 billion.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Carol Cowan
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Brian Oak
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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