>>> Moody's places 11 mining companies rated in the US on review for downgrade

Moody's places 11 mining companies rated in the US on review for downgrade

New York, January 21, 2016 -- Moody's Investors Service has placed the ratings of 11 mining companies rated in the US and their rated subsidiaries, on review for downgrade. A complete set of companies and rating actions is listed below.

The actions reflect Moody's effort to recalibrate the ratings in the mining portfolio to align with the fundamental shift in the credit conditions of the global mining sector.

"Slowing growth in China, which consumes and produces at least half of base metals, and is a material player in the precious metals, iron ore and metallurgical coal markets is weakening demand for these commodities and driving prices to multi-year lows," says Carol Cowan, a Moody's Senior Vice President. "China's outsized influence on the commodities market, coupled with the need for significant recalibration of supply to bring the industry back into balance indicates that this is not a normal cyclical downturn, but a fundamental shift that will place an unprecedented level of stress on mining companies."


On Review for Downgrade: ..Issuer: Alcoa Inc. .... Corporate Family Rating, Ba1, Placed on Review for Downgrade .... Probability of Default Rating, Ba1-PD, Placed on Review for Downgrade ....Senior Unsecured Shelf, (P)Ba1, Placed on Review for Downgrade ....Pref. Stock Preferred Stock, Ba2 (LGD6), Placed on Review for Downgrade ....Senior Unsecured Medium-Term Note Program, (P)Ba1, Placed on Review for Downgrade ....Senior Unsecured Regular Bond/Debenture, Ba1 (LGD4), Placed on Review for Downgrade ..Issuer: Iowa Finance Authority ....Backed Senior Unsecured Revenue Bonds, Ba1 (LGD4), Placed on Review for Downgrade ..Issuer: Chelan County Development Corporation, WA ....Backed Senior Unsecured Revenue Bonds, Ba1 (LGD4), Placed on Review for Downgrade ..Issuer: Hecla Mining Company .... Corporate Family Rating, B2, Placed on Review for Downgrade .... Probability of Default Rating, B2-PD, Placed on Review for Downgrade ....Senior Unsecured Regular Bond/Debenture, B3 (LGD4), Placed on Review for Downgrade ..Issuer: Newmont Mining Corporation ....Backed Senior Unsecured Shelf, (P)Baa2, Placed on Review for Downgrade ....Backed Senior Unsecured Regular Bond/Debenture, Baa2, Placed on Review for Downgrade ..Issuer: Rio Tinto (Commercial Paper) Limited ....Backed Senior Unsecured Commercial Paper, P-2, Placed on Review for Downgrade ..Issuer: Rio Tinto (Commercial Paper) plc ....Backed Senior Unsecured Commercial Paper, P-2, Placed on Review for Downgrade ..Issuer: Rio Tinto America Inc. .... Backed Issuer Rating, A3, Placed on Review for Downgrade ....Backed Senior Unsecured Commercial Paper, P-2, Placed on Review for Downgrade ..Issuer: Rio Tinto Finance (USA) Limited ....Backed Senior Unsecured Medium-Term Note Program, (P)A3, Placed on Review for Downgrade ....Backed Senior Unsecured Regular Bond/Debenture, A3, Placed on Review for Downgrade ....Backed Senior Unsecured Shelf, (P)A3, Placed on Review for Downgrade ..Issuer: Rio Tinto Finance (USA) plc ....Backed Senior Unsecured Medium-Term Note Program, (P)A3, Placed on Review for Downgrade ....Backed Senior Unsecured Regular Bond/Debenture, A3, Placed on Review for Downgrade ....Backed Senior Unsecured Shelf, (P)A3, Placed on Review for Downgrade ..Issuer: Rio Tinto Finance Canada Inc ....Backed Senior Unsecured Commercial Paper, P-2, Placed on Review for Downgrade ..Issuer: Rio Tinto Finance Limited ....Backed Senior Unsecured Commercial Paper, P-2, Placed on Review for Downgrade ..Issuer: Rio Tinto Finance plc ....Backed Issuer Rating, A3, Placed on Review for Downgrade ....Backed Senior Unsecured Commercial Paper, P-2, Placed on Review for Downgrade ....Backed Senior Unsecured Regular Bond/Debenture, A3, Placed on Review for Downgrade ..Issuer: Rio Tinto Limited .... Issuer Rating, A3, Placed on Review for Downgrade ..Issuer: Rio Tinto plc .... Issuer Rating, A3, Placed on Review for Downgrade ..Issuer: Salt Lake County ....Backed Senior Unsecured Revenue Bonds, A3, VMIG 2, Placed on Review for Downgrade ..Issuer: Armstrong Energy, Inc. .... Corporate Family Rating, B3, Placed on Review for downgrade .... Probability of Default Rating, B3-PD, Placed on Review for downgrade ....Senior Secured Regular Bond/Debenture, B3 (LGD3), Placed on Review for downgrade ..Issuer: Bowie Resource Partners LLC .... Corporate Family Rating, B2, Placed on Review for downgrade .... Probability of Default Rating, B2-PD , Placed on Review for downgrade ....Senior Secured Bank Credit Facility, B1 (LGD3), Placed on Review for downgrade ....Senior Secured Bank Credit Facility, Caa1 (LGD5), Placed on Review for downgrade ..Issuer: Cloud Peak Energy Resources LLC .... Corporate Family Rating, B1, Placed on Review for downgrade .... Probability of Default Rating, B1-PD, Placed on Review for downgrade ....Senior Unsecured Regular Bond/Debenture, B3 (LGD5), Placed on Review for downgrade ....Backed Senior Unsecured Regular Bond/Debenture, B3 (LGD5), Placed on Review for downgrade ..Issuer: Coeur Mining, Inc. .... Corporate Family Rating, B3, Placed on Review for downgrade .... Probability of Default Rating, B3-PD, Placed on Review for downgrade ....Senior Secured Bank Credit Facility, Ba3 (LGD1), Placed on Review for downgrade ....Senior Unsecured Regular Bond/Debenture, Caa1 (LGD4), Placed on Review for downgrade ..Issuer: CONSOL Energy Inc. .... Corporate Family Rating, B1, Placed on Review for downgrade .... Probability of Default Rating, B1-PD, Placed on Review for downgrade ....Senior Unsecured Regular Bond/Debenture, B3 (LGD5), Placed on Review for downgrade ..Issuer: Natural Resource Partners L.P. .... Corporate Family Rating, B1, Placed on Review for downgrade .... Probability of Default Rating, B1-PD, Placed on Review for downgrade ....Senior Unsecured Regular Bond/Debenture, B3 (LGD5), Placed on Review for downgrade ....Backed Senior Unsecured Regular Bond/Debenture, B3 (LGD5), Placed on Review for downgrade ..Issuer: Westmoreland Coal Company .... Corporate Family Rating, B3, Placed on Review for downgrade .... Probability of Default Rating, B3-PD, Placed on Review for downgrade ....Senior Secured Bank Credit Facility, Caa1 (LGD4), Placed on Review for downgrade ....Senior Secured Regular Bond/Debenture, Caa1 (LGD4), Placed on Review for downgrade Outlook Actions: ..Issuer: Alcoa Inc. ....Outlook, Changed To Rating Under Review From Developing ..Issuer: Hecla Mining Company ....Outlook, Changed To Rating Under Review From Negative ..Issuer: Newmont Mining Corporation ....Outlook, Changed To Rating Under Review From Negative ..Issuer: Rio Tinto (Commercial Paper) Limited ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto (Commercial Paper) plc ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto America Inc. ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto Finance (USA) Limited ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto Finance (USA) plc ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto Finance Canada Inc ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto Finance Limited ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto Finance plc ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto Limited ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Rio Tinto plc ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Armstrong Energy, Inc. ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Bowie Resource Partners LLC ....Outlook, Changed To Rating Under Review From Stable ..Issuer: Cloud Peak Energy Resources LLC ....Outlook, Changed To Rating Under Review From Negative ..Issuer: Coeur Mining, Inc. ....Outlook, Changed To Rating Under Review From Positive ..Issuer: CONSOL Energy Inc. ....Outlook, Changed To Rating Under Review From Negative ..Issuer: Natural Resource Partners L.P. ....Outlook, Changed To Rating Under Review From Negative ..Issuer: Westmoreland Coal Company ....Outlook, Changed To Rating Under Review From Stable Unchanged: ..Issuer: Alcoa Inc. .... Speculative Grade Liquidity Rating, Unchanged at SGL-1 ..Issuer: Hecla Mining Company .... Speculative Grade Liquidity Rating, Unchanged at SGL-2 ..Issuer: Cloud Peak Energy Resources LLC .... Speculative Grade Liquidity Rating, Unchanged at SGL-2 ..Issuer: Coeur Mining, Inc. .... Speculative Grade Liquidity Rating, Unchanged at SGL-2 ..Issuer: CONSOL Energy Inc. .... Speculative Grade Liquidity Rating, Unchanged at SGL-3 ..Issuer: Natural Resource Partners L.P. .... Speculative Grade Liquidity Rating, Unchanged at SGL-3 ..Issuer: Westmoreland Coal Company .... Speculative Grade Liquidity Rating, Unchanged at SGL-3

(MS) European Equity Strategy : Just how bearish should you get?

With macro newsflow tracking closer to our bear case than our base
case, we use scenario analysis around PE and EPS assumptions to
quantify potential further downside risks to European equities. On
today's N12M PE of 13.6, we estimate the market is pricing in a 2-
year EPS CAGR of c. 4%.

Recent macro newsflow has been more bear case than base case.
Although we argued that 2016 would be a tough year for European equities in
our year ahead report, we did not expect such a bad start to the year. Over the
last couple of months, the macro newsflow has broadly followed our bear case
scenario, especially around EM deterioration and FX tension. The lack of an
identifiable bull case is encouraging greater short activity in equities and
commodities.

12% downside before absolute valuations become appealing in their
own right
Absolute equity valuations are not yet low enough to warrant buying the
market on valuation alone, with MSCI Europe's N12M PE at its long-run
average. We calculate that the market would need to fall a further 12% to take
the average of 17 different absolute valuation metrics back to their long-run
median level.

Scenario analysis - we estimate market is pricing in 4% 2Y EPS CAGR at
N12M PE of 13.6.
The market is currently midway between our base case and bear case 12m
price targets, although equity valuations are now at our bear case PE
assumption of 13.6. At a N12M PE of 13.6 we estimate that the market is
currently pricing in a 2Y EPS CAGR of about 4%, while a move down to an EPS
CAGR of 0% would equate to a further 7% drop in equity prices. We estimate
33% downside under a full-blown recession scenario of a 20% drop in EPS and
a N12M PE of 12.

Key factors to watch - Earnings, China, EM, Fed.
The key factors likely to influence market performance in the coming weeks
and months are: i) Earnings season; ii) China & EM macro newsflow (especially
FX related); iii) USD and Fed commentary; iv) Industrial & commodity
performance; v) any signs of weakening in European macro newsflow.

Sector strategy - between a rock and a hard place
We have been too bullish on commodities and too bearish on defensives over
the last four months. With European quality stocks trading at a record high to
their US peers, coupled with a high degree of consensus positioning, we don’t
want to make a wholesale U-turn; however, we recognise the need to be
pragmatic. Consequently, we downgrade Energy to neutral and Div Fins to
underweight, while upgrading Telecoms to overweight and Healthcare to
neutral.

(BofA-ML) The Flow Show : Recessionary Bond Flows

>>> Asset Class Flows
* Equities: $3.5bn outflows (3-week outflows = $24bn) (note $5.1bn mutual fund outflows offset by $1.7bn ETF inflows)
* Bonds: $2.8bn outflows (largest in 4 weeks)
* Commodities: $0.8bn inflows (inflows in 6 of past 7 weeks)

>>> Equity Flows
* EM: $2.3bn outflows (largest in 19 weeks) (12 straight weeks of outflows)
* US: $4.3bn outflows (all via mutual funds)
* Europe: $0.6bn inflows (inflows in 15 of past 16 weeks)
* Japan: $3.0bn inflows (largest in 18 weeks)
* Equity sector flows do question market leadership: funds covering tech, financials, & consumer sectors all record largest weekly outflows in 21 weeks ($3.1bn outflows combined); healthcare also sees largest outflows in 14 weeks.

>>> Fixed Income Flows
* Big $4.9 outflows from HY bond funds (2nd largest outflows in 12 months)
* Chunky $2.3bn outflows from EM debt funds (largest in 20 weeks) (outflows in 23 of 26 weeks)
* 12 straight weeks of outflows from bank loan funds ($0.7bn) (outflows in 24 of past 25 weeks)
* IG bond funds also succumb to $1.0bn outflows
* Huge $5.1bn inflows to Govt/Tsy funds (largest in almost 12 months) 18 straight weeks of inflows to Munis ($0.5bn)

--> Bond flows recessionary: largest inflows to government bond funds in 12 months ($5bn), 2nd largest outflow from HY funds in 12 months ($4.9bn - HY outflows over past 7 weeks = 5% AUM = capitulation), and chunky outflows from EM debt ($2.3bn).

--> Equity flows not recessionary: modest weekly equity redemptions of $3.5bn; equity outflows past 3 weeks = $24bn outflows (= 0.3% AUM)…this pales in comparison to $36bn during Aug'15 sell-off, $90bn during Aug'11 debt ceiling sell-off, $85bn during '08 GFC; flows mirror Jan FMS findings…positioning yet to reveal Full Capitulation.

--> Price action shows policy impotence & Quantitative Failure: since Japan expanded ETF purchases Dec 18th the Yen is +2.9%, Nikkei -16.6%; since ECB cut rates Dec 3rd the Euro is -1.1%, Euro Stoxx 600 -11.6%; and since Fed hiked on Dec 16th the S&P is -9.4%, 2yr yields are -18bps, 10yr yields -29bps. 3P’s say…: lacking true Positioning shake-out, lacking catalysts for Profit turnaround & lacking visible Policy panic, we remain “sellers into strength” of risk assets.