BP’s Credit Rating Cut by Fitch to Two Levels Above ‘Junk’

Source: Bloomberg

June 15 (Bloomberg) -- BP Plc’s credit rating was cut to two levels above “junk” by Fitch Ratings on concern over the potential cost of cleaning up the Gulf of Mexico oil spill and meeting future liabilities.

BP’s long-term issuer default and senior unsecured ratings were lowered six levels to BBB from AA, Fitch said in a statement today. That follows a reduction from AA+ on June 3.

President Barack Obama and U.S. lawmakers said this week that BP should suspend dividends and set aside funds now for legal claims against the company from the spill, the worst in U.S. history. Fitch said it would be “surprised” if BP didn’t suspend the quarterly payout until the full costs are known. The cost of cleanup and liabilities may reach $40 billion, Standard Chartered Plc. estimated last week.

“The recent claims by U.S. state and federal authorities that BP escrow significant sums preemptively, ahead of any agreed claims process, represent a material change in approach,” Fitch said in a statement.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=akLiysG_VLJQ&pos=3

The lower their ability to issue bonds the more dificult it may become for them to pay clean up costs. So - if you want to say whoopee feel free but don't bleat about it if that happens.

Source: The Huffington Post

LONDON — An influential ratings agency downgraded BP on Tuesday because of worries about the continuing Gulf of Mexico spill, sending the oil company's shares to a new low.

Shares in BP fell below 350 pence for the first time since the oil rig disaster, dropping 2.5 percent to 346 pence ($5.12) by midafternoon on the London Stock Exchange.

Fitch Ratings downgraded BP's long-term issuer default rating and senior unsecured rating to BBB from AA.

"The scale of today's rating action has been partly driven by the increased risk that the balance between long-term and near-term cost payments may now be skewed much more heavily toward the near term than previously anticipated," Fitch said.

Read more: http://www.huffingtonpost.com/2010/06/15/bp-downgraded-by-fitch-ov_n_612380.html

---

Sub-headline on Huffington Post home page is "BP's Credit Rating Downgraded To Just Above Junk Status."

This is to do with their bonds.