Fitch Ratings downgraded BP (NYSE:BP) notches, from AA to BBB, not far from junk status.
The reasons given by Fitch were:
“The indication late last week from US government scientists of a significantly higher spill rate than previously announced by all parties, which Fitch expects will materially increase BP’s exposure to Justice Department fines payable in the near to medium-term.”
and ...
“The significant step-up in action from the U.S. government surrounding calls for pre-emptive escrowing of damage claims. Both of these events have a direct bearing on BP’s fundamental financial flexibility.”
As Fitch mentioned, the amount of money to be paid out is increasing for BP, while the timeframe within which to pay it is decreasing.
That could result in more multi-notch downgrades in the near future, said the ratings agency.
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