18 Jun 2010

BP's credit ratings lowered by agency

12:33 pm on 18 June 2010

Standard & Poor's has lowered BP's corporate credit ratings because of the company's liabilities to the oil leak in the Gulf of Mexico.

The ratings agency has cut the rating to A from AA- and says further downgtrades are possible if the costs from the leak grow.

S&P said there is substantial uncertainty over BP's liabilities.

It says these include the company's difficulties in stemming the flow of oil and will also depend on the extent of pollution it causes and the consequences from official investigations.

BP is suspending its dividend for three quarters to help finance a $US20 billion fund to pay for the costs of the leak.

BP also said it would reduce its investment programme and sell $US10 billion worth of assets.

S&P said BP is now subject to intense political pressure in the United States.

Earlier this week, Fitch Ratings downgraded BP from AA to BBB.

Fitch expressed concerns on Tuesday about "BP's fundamental financial flexibility".

The incident has so far cost $US1.6 billion, the company said on Monday.

The leak began after an explosion and fire on the Deepwater Horizon drilling rig on 20 April. The rig sank two days later.