Top analysts claim that BHP Billiton Limited (ADR) [stock symbol=”BHP”]
needs to raise at least $10 billion funds in the next stock sale to investors if it wants to keep the current credit rating intact. The report covering this statement was unveiled by a top-notched analyst who covers the largest mining firm of the world on regular basis.
Richard Knights, Liberum Capital came up with eye-opening views in his latest notes, saying that in order to maintain its A1 rating at Moody’s Investor Service and A+ credit rating at Standard & Poor’s, BHP would need another $10 billion funds in its upcoming stock sale. What happened in the world economy lately, pulled down the prices of commodities such as oil and iron ore, which increased the problems for BHP Billiton. The company will have to come up with an innovative plan to achieve its goal to maintain the existing A+ and A1 ranking in 2016.
Knights said that BHP is in desperate need of $5-$10 billion to get rid of the shortfall caused by the economic turmoil, and the upcoming share deal should pave a way for it to arrange this much of funding. If the market continues to behave in the same manner, BHP would need to come up with a solid plan as cutting down dividend and capital expenditures wouldn’t work for it any longer.
The headwinds in China have slowed down the growth story of many miners, and BHP is one of them. Many of them have already sold their assets and closed down operations to get rid of this financial distress. Companies like BHP have to play around with their Goodwill and customers’ faith to ensure that they don’t fade away in this storm.
Experts claim that investors might support BHP at this moment to raise capital; however, there are substantial chances of complications in achieving the funding target.