BHP faces ratings downgrade amid prolonged commodities slump

Melbourne

WHETHER BHP Billiton Ltd scraps its progressive dividend policy or not, it risks a credit ratings downgrade as the collapse in oil and iron ore shows no sign of abating.

The price to protect BHP bonds from non-payment reached a four-year high of 132.5 basis points on Nov 13 as the yield premium offered over swap rates surged for its debt. While the company is graded at the highest A level by the three major ratings companies, Bloomberg's default-risk model indicates its creditworthiness is more in line with the highest BBB score, three levels lower.

Iron ore, the top earner for the world's biggest mining company, has dropped to a four-m…