S&P To Begin Classifying Commodities Streaming Deals As Debt Financing

Standard & Poor's Rating Services (S&P) has announced an update to its criteria for analysing streaming transactions. Under the new criteria, many commodities streaming transactions will be classified as a debt rather than non-debt financing. This approach will impact S&P's analysis of adjusted debt and related credit metrics, which in turn has the potential to affect corporate issuer credit ratings.

In recent years streaming transactions have emerged as an important financing option for mining issuers. A streaming transaction is a transaction where a commodity producer sells forward the right to a share of future production at a preset price, which is typically at a significant discount to prevailing market prices, in exchange for an upfront cash payment. Streaming transactions have proven particularly effective at monetizing by-product production upfront, for example where a base metals miner yields or expects to yield some precious metals by-product through its