Fitch moves Fortescue outlook to negativeDate September 5, 2012...

Fitch moves Fortescue outlook to negative

Date
September 5, 2012 - 4:12PM


AAP

Ratings agency Fitch has downgraded its outlook for iron ore miner Fortescue Mining Group to negative from stable.

Fitch said the negative outlook reflected the increasing pressure on the miner's liquidity and debt covenants that it was facing following steep falls in iron ore prices.

"The peak debt requirements of the company's large debt-funded capacity expansion is coinciding with a rapid and continuing decline in iron ore prices," it said.

"The current outlook is negative.
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"As a result, Fitch's sensitivities do not currently anticipate developments with a material likelihood, individually or collectively, of leading to a rating upgrade."

Fitch said that while Fortescue's plans to defer part of its plan to triple production to about 155 million tonnes a year should alleviate some of the liquidity and covenant pressure in 2013, the ability to satisfy its covenants depended on iron ore prices recovering to about $US110 ($A108) a tonne.

© 2012 AAP

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