Fitch cuts Harmony’s debt rating on ‘concern’
Antony Sguazzin
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Bloomberg
HARMONY Gold’s debt rating has been cut one notch by Fitch Ratings, which said yesterday the company’s ability to meet its financial obligations would be affected unless its operating performance improves.
Fitch lowered the mining company’s debt rating to BBB+, three steps above high-risk, or junk, status and put the company on a negative outlook, indicating it was more likely to cut the rating again than raise it or leave it unchanged.
This came after Harmony’s hostile bid to acquire larger rival Gold Fields fell apart last week, after a six-month tussle that saw the share prices of both gold-mining companies drop.
Fitch also suggested that Harmony should sell its stake of almost 12% in Gold Fields.
“The downgrade of Harmony’s long-term rating reiterates Fitch’s continuing concern with the company’s operating performance,” Fitch said.
In the three quarters to the end of March, Harmony posted a net loss of R1,7bn — its fifth successive quarterly loss — after the rand gained against the dollar, cutting its profit margins.
Harmony accumulated its Gold Fields shares in the first stage of the two-stage offer, before the R27bn bid failed.
Meanwhile, European merchant banking group UBS cut its target price on Harmony’s shares to R36 yesterday from R40.
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