S&P Global Ratings upgraded its outlook from negative to stable and reaffirmed its BB rating.

"We revised the outlook to stable because of Fortescue's improved resilience to lower iron ore prices, given the company's further cuts in production costs and repayment of a significant portion of debt over the year ended June 30, 2016,” S&P credit analyst Sam Heffernan said.

“We view Fortescue's credit metrics have sufficient headroom at the current rating level to withstand moderate downside risk in iron ore prices should external pressures intensify.

“This includes our expectation of slower demand growth from China's struggling steel industry and a continued increase in the supply of low-cost seaborne iron ore.”

S&P yesterday revised up its iron ore forecasts for the rest of 2016 $US10 to $50/t, but downgraded next year’s forecast by $5/t to $40/t as Chinese stimulus measures fade.

Like S&P, Fitch Ratings upgraded FMG’s outlook from negative to stable and affirmed its long-term issuer default rating at BB+.

The agency upgraded the rating of FMG’s senior unsecured notes due in 2022 to BB+ and reaffirmed its long-term investment grade rating on the secured term loan and senior secured notes of BBB-.

It comes after Moody’s Investors Service last week upgraded FMG’s corporate family rating was upgraded to Ba2 from Ba3, the senior secured credit rating to Ba1 and the senior unsecured credit rating to B1.

FMG chief financial officer Stephen Pearce said it was pleasing that the agencies had acknowledged the company’s efforts.

“We have been committed to the strengthening of our balance sheet through operational excellence and generating free cashflows which have supported the reduction of debt,” he said.

The company repaid $2.9 billion of debt in FY16, reducing net debt to $5.2 billion at June 30.

Pearce said the company’s strengthened credit profiles supported alternatives for further debt repayment or refinancing.

Shares in FMG closed A1c higher yesterday at $4.89.