Thursday, June 17, 2010

BP (NYSE:BP) Downgraded by Standard & Poor's

Unsurprisingly, after Fitch Ratings hammered BP (NYSE:BP) by lowering its rating by six notches from AA to BBB, Standard & Poor's has quickly followed by lowering their BP rating from 'AA-/A-1+' to 'A/A-1.'

"The downgrade reflects our opinion of the challenges and uncertainties that BP continues to face in the aftermath of the explosion on the Deepwater Horizon rig in the Gulf of Mexico on April 20, 2010, and the subsea Macondo well blowout," said Standard & Poor's credit analyst Simon Redmond. "These challenges and uncertainties include the difficulties BP is experiencing in containing the spill as well as the ultimate extent of the pollution, the consequences for BP of ongoing official investigations, and the implications of these investigations for the magnitude and timing of further cash payments by BP."

After the so-called escrow account where BP will pay in $20 billion over the next four years, net debt for the giant oil company increased to $45.2 billion, up from the prior $25.2 billion at the end of March.

Ongoing uncertainties related to the Gulf oil spill have Standard & Poor's also saying more downward rating adjustments could be implemented in the near future.

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