Fortescue is another step closer to winning an investment-grade credit rating after it announced another debt repayment. It has issued a notice of repayment on its USD$700 million 2019 senior secured credit facility with the repayment to be financed out of free cash flow. This latest repayment comes on top of USD$2.9 billion already repaid in the 2016 financial year.
Westpac estimate Fortescue’s credit ratios as exceeding the thresholds specified by S&P Global Ratings for a credit upgrade. However, the bank points out S&P’s guidance regarding future conditions where iron ore prices are lower and “we don’t see an upgrade from S&P occurring imminently. UBS are less positive and state the market still views Fortescue’s debt levels as a concern although it acknowledges any debt repayments are positive. Macquarie are the most bullish and expect the iron ore miner to be upgraded to investment grade in the near term if especially iron ore price holds up.
