DBRS Publishes Report on Public Mining Ratings

DBRS has today published a compilation of its public mining-oriented ratings along with a summary of associated key financial metrics for the latest 12-month period as calculated by DBRS.

The international mining sector has been confronted with strong product demand but generally weaker commodity prices since mid-2011, resulting in a deterioration of the credit metrics of many of the companies that DBRS rates, particularly those metrics that relate to earnings.

The excess supply of various commodities, resulting from heavy capital investment due to strong commodity prices in 2010-2011, remains in early 2014 and could get worse as the full impact of capacity expansion is not yet in place. That said, mining companies have cut back dramatically on new project approvals, which along with consumption growth can be expected to make room for the excess volumes, leading to an expectation of eventual commodity price stability. The timing of the rebalance becomes the issue and the uncertainty of the 2014 economic growth story, particularly in China, leads to DBRS’s generally negative to neutral view on the progress of earnings-related metrics in 2014.

DBRS’s mining sector credit ratings are determined primarily in accordance with its methodology, “Rating Companies in the Mining Industry.” They reflect DBRS’s opinions regarding the creditworthiness of an issuer, a security or an obligation based upon analysis of historic trends and forward-looking measurements that assess an issuer’s ability and willingness to make timely payments on outstanding obligations with respect to the terms of an obligation. In determining its rating opinions, DBRS uses rating methodologies that include consideration of general business and financial risk factors applicable to most industries in the corporate sector as well as industry-specific issues and more subjective factors, nuances and intangible considerations. This approach is not based solely on statistical analysis but includes a combination of both quantitative and qualitative considerations.

Notes:
The applicable methodologies are Rating Companies in the Mining Industry (June 2011) and Rating Companies in the Industrial Products Industry (June 2013), which can be found on our website under Methodologies.

For the “DBRS Public Mining Ratings by Rating Category with Key Metrics” report, DBRS methodologies or for more information on this industry, visit www.dbrs.com or contact us at info@dbrs.com.