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.
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"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."
