Fitch downgrades BP after failure to stop oil leak

03 June 2010 12:34  [Source: ICIS news]

LONDON (ICIS news)--Fitch Ratings has downgraded BP's long-term issuer default rating and senior unsecured rating to “AA” from “AA+” respectively, because the company has failed to stop the oil leak in the US Gulf of Mexico, the agency said on Thursday.

BP was also placed on Fitch’s “negative watch” list. The moves reflected the agency’s opinion that risks to both BP's business and financial profile would continue to increase following the Deepwater Horizon disaster.

“The company has so far repeatedly failed to stop the resultant oil leak and has instead reverted to containment methods that are yet to be fully implemented and are subject to potential weather-related disruption,” Fitch said.

An additional factor supporting the downgrade was the announcement on 1 June by US Attorney General Eric Holder of the opening of both a criminal and civil investigation into the oil spill, which could have potential negative implications for BP's financial profile, Fitch added.

“Fitch's understanding remains that, as 65% owner of the well, BP is primarily responsible for funding clean-up operations in relation to the Deepwater Horizon accident. Fitch continues to anticipate that these operations could reach costs of $2bn-3bn (€1.6-2.5bn) in 2010 for the company, depending on how much oil eventually reaches the US shoreline,” it said.

($1 = €0.82)

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By: Franco Capaldo
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