Ratings agency Standard & Poor's has taken Rio Tinto off CreditWatch negative after the mining giant announced plans to slash its dividend payouts to shareholders.
Rio last week unveiled a $US866 million full year loss and said it would end its progressive dividend policy as part of its action plan against falling commodity prices.
The move paved the way for S&P on Monday to take Rio off CreditWatch with negative implications. It also affirmed the miner's A-/A-2 long- and short-term corporate credit ratings.
However, S&P retains a negative outlook on the miner, reflecting its view that continued weakness and volatility in commodity prices may weaken Rio's cash generation.
S&P warned it could downgrade Rio Tinto's ratings in the next 18 months if its adjusted funds from operation-to-debt ratio falls below 30 per cent and failed to recover to above 35 per cent in 2017, or if cash flow turns negative.
"In our view, this is possible if the Chinese economy experienced a worse-than-anticipated slowdown, leading to prolonged weaker demand for iron ore, aluminium, and copper," S&P said in a statement.
"Rating pressure would also increase if the company entered into a large acquisition funded solely by its cash on hand."
