NEW YORK — Two credit ratings agencies have downgraded BP, noting the extreme financial risks tied to the ongoing Gulf oil spill.
Both Fitch Ratings and Moody’s Investors Service said further downgrades are possible.
“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 Ratings said.
Fitch downgraded BP PLC’s Long-term Issuer Default Rating and senior unsecured rating to “AA” from “AA+”. Moody’s Investors Service also downgraded BP to “Aa2” from “Aa1”. Despite the downgrades, BP’s rating remains among the highest for both agencies.
Besides failing to plug the well, Fitch said a number of factors could hurt the company. The agency noted the possibility of new laws that could force BP to pay more than currently expected.
The oil company could be responsible for long-term unemployment benefits for Gulf Coast residents, job training and added costs of environmental tests.
Fitch also said it is concerned about BP permanently halting drilling activity in the Gulf and noted a federal investigation could warrant criminal or civil penalties against the company.
Efforts to plug the well and cleanup the oil will cost between $2 billion and $3 billion this year, Fitch said.