Shares of BHP Billiton Limited (ASX: BHP) have been hammered again today, plunging as much as 4.9% to $14.17 and threatening to fall to a new decade-low price.

The loss can partially be attributed to another steep decline in oil prices overnight, with Brent oil now fetching US$32.97 a barrel, but is also likely due to yesterday’s announcement that the Standard & Poor’s (S&P) had downgraded its credit rating.

Indeed, mining companies around the world have come under intense pressure in recent years as a result of the slowdown in China’s growth, combined with crashing commodity prices. BHP has been somewhat protected by its sheer size and low-cost operations, but its earnings and cash flows have still been crunched.

The miner’s credit rating has been under review for some time but the S&P finally made the call to lower it by one notch yesterday. What’s more, there is the potential for even more cuts in the very near future, and BHP’s progressive dividend policy looks set for the chopping block in order to prevent that from happening.

Under BHP’s progressive dividend policy, the company has promised to increase or at least maintain, its US-denominated shareholder payouts at every six-month interval. It saw the miner distribute nearly US$6.6 billion to shareholders in financial year 2015 — the equivalent of US$1.24 (AU$1.64) per share, which compares to the US 35.8 cents (AU 47 cents) in diluted earnings per share.

Source: 2015 Annual Report

Source: 2015 Annual Report

With commodity prices expected to remain low for some time, it is clear that dividend yield is not sustainable and if BHP continues to pay that amount (or more), it will only act to weaken the miner’s balance sheet even further.

As quoted by The Sydney Morning Herald, the S&P said, “we could lower the rating by another notch if the company remains committed to its progressive dividend policy while its cash flows are pressured by lower commodity prices.”

What happens now?

Whether or not the S&P does cut BHP’s credit rating any further will largely depend on the miner’s interim earnings report which is due for release later this month. It will look closely at the miner’s capital expenditure plans and its ability to continue cutting costs, while it will also be looking for a considerable cut to the group’s dividend payments.

Some analysts even think the interim dividend could be slashed in half. It’s also possible that the miner could announce a major capital raising in order to shore up its balance sheet – possibly to the tune of more than US$10 billion, as some analysts have suggested.

Another big question mark hanging over BHP Billiton’s shareholders is:

How low will the miner’s shares actually go?

They recently hit their lowest price in more than a decade at just $14.06 – down more than half in the last 11 months – but some analysts think it could fall to just $10, or perhaps even lower.

Despite the miner’s horror run, further declines in BHP’s share price are certainly possible, particularly if iron ore and oil prices do continue to drop. To me, the risk vs. reward trade-off isn’t compelling enough yet to buy the miner’s shares, with plenty of other opportunities looking far more compelling right now.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.