Standard & Poor's has cut its outlook for Rio Tinto Limited (ASX:RIO) to negative due to concerns the global mining company’s debt is rising quicker than expected on the back of lower iron ore prices.
While Rio Tinto’s A-minus credit rating has been affirmed the ratings agency has warned Rio Tinto may face a credit downgrade if its debt continues to rise.
S&P advises Rio Tinto’s outlook could revert to stable if the company increases its ratio of funds from operations to debt above 40 per cent from 30 per cent in 2012.
Rio Tinto revealed a 24 per cent increase in gross debt to $US26.7 billion at the end of last year and appointed new CEO Sam Walsh to replace Tom Albanese earlier this year.
Rio Tinto booked an annual net loss of $2.9 billion in the 2012 calendar year.
