S&P upgrades Barrick credit rating

S&P Global Ratings has upgraded Barrick Gold’s (TSX: ABX; NYSE: GOLD) long-term corporate credit rating a notch from BBB to BBB+.

With a ‘stable’ outlook, S&P in a note said that the upgrade reflected Barrick’s significant financial flexibility, noting a favourable view of Barrick’s operating efficiency and breadth.

S&P analysts expect Barrick’s credit profile to remain highly resilient, even in a lower gold price environment.

Since March 2015, when S&P last downgraded Barrick’s long-term corporate debt rating, Barrick’s credit rating has remained stable or improved, including an upgrade to BBB from BBB- in March 2018. Barrick’s credit rating was also upgraded to Baa1 by Moody’s Investors Service in October 2020.

Barrick’s Hemlo underground mine in Ontario. Credit: Barrick Gold.

During the transformative period for Barrick that followed since the watershed Randgold Resources merger was announced late in 2018, Barrick has generated strong free cash flows, reduced net debt, and significantly increased returns to shareholders, including a record US$1.4 billion of cash distributions in 2021. Its recently announced performance dividend policy adds further momentum to the gold major’s trajectory, says senior executive vice president Graham Shuttleworth in a release.

“Barrick is in a strong liquidity position, with US$130 million of consolidated net cash at the end of 2021, an undrawn $3 billion credit facility, and no significant debt repayments due until 2033, providing us with sufficient liquidity to execute on our strategic goals,” said Shuttleworth.

At $30.67 apiece, Barrick’s Toronto-quoted equity is up more than 22% over the past 12 months, giving it a market capitalization of 54.57 billion (US$43.65 billion).