Moody’s Ratings affirms BHP’s A1 ratings; outlook remains stable

Moody’s Ratings affirms BHP’s A1 ratings; outlook remains stable

Moody’s Affirms BHP’s A1 Credit Rating, Citing Strong Balance Sheet and Stable Outlook

Moody’s Investors Service has reaffirmed BHP Group’s long-term credit rating at A1, with a stable outlook, reflecting the miner’s robust financial position and disciplined capital management according to the latest rating analysis. This decision underscores confidence in BHP’s ability to maintain strong credit metrics despite ongoing challenges in global commodity markets.

BHP’s balance sheet remains a key strength, with a gearing ratio (net debt divided by total capital) of 23.2% as of recent reports, lower than peers such as Rio Tinto (approximately 25%) according to financial data. The company’s debt-to-EBITDA ratio also remains within comfortable parameters, aligning with Moody’s criteria for low default risk. These metrics position BHP to fund reinvestment, sustain dividends, and navigate price volatility in critical commodities like iron ore and oil.

The rating affirmation contrasts with a prior downgrade in March 2016, when Moody’s cut BHP’s rating from A1 to A3 due to weaker financial metrics amid prolonged low commodity prices as reported by Yield Report. However, BHP’s recent strategic adjustments—including a shift away from its “progressive dividend” policy and capital expenditure reductions—have strengthened its resilience. Moody’s noted that while near-term credit metrics may remain “substantially weaker,” BHP’s long-term stability is supported by its diversified asset base and cost discipline according to the analysis.

BHP’s A1 rating from Moody’s is complemented by an “A-1” short-term rating from Standard & Poor’s, reflecting broad recognition of its creditworthiness according to Yahoo Finance. The stable outlook indicates that Moody’s expects no significant changes to BHP’s rating trajectory in the near future, provided the company maintains its current financial policies and operational performance.

For investors, the affirmation reinforces BHP’s position as one of the mining sector’s most creditworthy players, capable of weathering cyclical pressures while supporting shareholder returns and strategic growth.

Source: Moody’s Investors Service, April 10, 2024
Source: Yahoo Finance, 2014 analysis
Source: Yield Report, March 4, 2016