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