JOHANNESBURG - AngloGold Ashanti on Monday said it was pleased to note that ratings agency Standard & Poor’s affirmed the investment grade rating on the company’s publicly traded debt following an extensive review.
The company’s Chief Financial Officer (CFO) Srinivasan Venkatakrishnan said the announcement was positive.
“We have seen a spate of negative downgrades, one after the other. Hopefully, this will change the trend.”
Venkatakrishnan says there are many risks involved when companies are downgraded.
“Your cost of capital goes up. When your debt gets downgraded, the coupon on your debt goes up.
“The market capacity from which you are raising debt shrinks because there are certain funds that can’t hold anything but investment grade paper. That then has a knock-on effect on your share price.”
In 2011, Moody's upgraded the mining company from BAA3 to BAA2.
The company was also affected by the recent wage strikes in the mining sector, which had huge implications on operations and product output.
Venkarakhrishnan said they are not closed to the idea of unbundling their operations, after Gold Fields announced its spinoff last week.
“At the end of the day, we have a very competitive South African portfolio and I am not going to be apologetic about it. I think our operations are of a superior quality.
“What we have taken to is to have a diversified portfolio. We generate a good cash flow and we manage it in a manner where we preserve our profitability.”