The Rising Influence of Rising Affluence

[DewDiligence]

[Standard & Poor's] has lifted Cliffs Natural Resources Inc.'s (CLF) outlook to stable from negative… The firm also affirmed the company's triple-B-minus corporate-credit rating, which is at the brink of junk territory.

If you take CLF’s 4Q12 CC at face value, the recent common and convertible financing transactions were done for the express purpose of averting a credit-rating downgrade to junk status (i.e. lower than BBB-).

However, I wonder how important such a consideration really was given that CLF had no near-term debt maturities to worry about (#msg-82208352). Unless there were covenants in CLF’s term loan that required an “investment grade” rating, it seems that CLF would have been able to carry on just fine even with a credit downgrade.