Fitch upgrades BP credit ratings on closure to US Gulf oil leak

08 September 2010 17:29  [Source: ICIS news]

HOUSTON (ICIS)--Fitch Ratings on Wednesday upgraded its credit ratings for BP to reflect the capping of its blown-out well in the Gulf of Mexico and building up liquidity to meet potential spill costs, it said.

Fitch raised the long-term issuer default rating (IDR) on BP to "A" from "BBB", which reversed a 15 June downgrade and gave the company a stable long-term outlook. The short-term IDR was also raised to "F1" from "F3".

The ratings agency said it believed BP’s total pending liabilities would be in a range from $35.0bn (€27.7bn) to $67.5bn, depending on the company’s success in potential legal cases.

Even at the high end of that range - which would include a finding of gross negligence, higher pollution fines under the US Clean Water Act, and no write-off tax relief - Fitch said it believed BP “now has adequate financial resources” to meet its obligations.

The ratings firm commended BP for substantially increasing its committed standby credit lines to $17bn from $5bn, as well as reaching $30bn in announced asset sales.

BP on Wednesday released the results of its internal investigation into the causes of the 20 April explosion of the Deepwater Horizon offshore rig, which killed 11 workers and resulted in the largest oil spill in Gulf history.

Analysts said the BP report could shed light how the company may defend itself in future litigation.

($1 = €0.79)

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By: Ben DuBose
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