Moody's changes outlook of BHP's ratings to stable

Sydney, November 26, 2008 -- Moody's Investors Service has today changed the outlook on BHP Billiton's A1 senior unsecured ratings to stable from negative.

"The change in outlook follows the company's announcement that it is not proceeding with its offer to acquire the Rio Tinto group", says Terry Fanous, Senior Vice President. "This removes the risk of a significant increase in debt related to the acquisition" he continued.

BHP Billiton has stated that withdrawal of the offer reflects the deteriorating operating environment and the difficulty in realizing asset sales at fair value in the current environment to satisfy conditions laid out by the European Commission.

The stable outlook also considers the company's additional announcements that 1) it has approved a growth project to further expand its iron ore operations at a scheduled cost of US$4.8 billion, and 2) it is raising a US$2.1 billion impairment charge in relation to its Ravensthorpe nickel project in Western Australia.

Over the past several years, BHP Billiton has strengthened its financial profile through substantial price and volume increases, combined with prudent financial policy. As such, Adjusted Debt/EBITDA as at 30 June 2008 was 0.6x, and its overall financial strength is currently well above the level necessary for an A1 rating. This positions it well to withstand declining commodity prices and the new capital expenditure announced.

Moody's expects financial leverage to grow over the next 1-2 years, due to the weaker operating environment, with the resulting profile also depending on the group's capital expenditure and any capital management initiatives. That said, Moody's expect Debt/EBITDA to remain below 2.0x over the next 1-2 years.

The stable outlook assumes that BHP Billiton will continue to manage its capital in a manner that is consistent with its prudent approach. In this regard, the rating could come under pressure if there is evidence of aggressive capital management strategies at a time of a weakening operating environment.

Financial metrics that could indicate such a profile include EBIT margin declining below 15%, and Adjusted Debt/EBITDA exceeding 2.0x across the cycle.

Moody's sees limited upside potential for the rating considering the weak operating environment across BHP Billiton's products.

BHP Billiton is the world's largest diversified natural resources company, with operations in petroleum, iron ore, metallurgical coal and manganese, alumina and aluminum, energy coal and base metals, stainless steel materials, uranium and diamonds. Headquartered in Melbourne, Australia, BHP Billiton generated consolidated turnover (excluding joint ventures) of US$41.2 billion for FYE 30 June 2008.

The rating was last confirmed on May 2, 2008 with negative outlook in relation to the bid to acquire Rio Tinto Ltd.



Sydney
Terry Fanous
Senior Vice President
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100


Sydney
Brian Cahill
Managing Director
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100