More trouble for BP after agencies cut credit rating

BP CAME under further pressure yesterday after rating agencies Fitch and Moody's downgraded the oil major's credit rating by one notch.

Fitch also lowered its outlook on BP debt from stable to negative amid fears that the cost of the clean-up from the Deepwater Horizon oil leak would continue to escalate.

The move came just hours after BP's chief executive Tony Hayward admitted in a newspaper interview that the company had not been fully prepared for a deep-water oil leak.

A statement from Fitch said: "The downgrade of BP's ratings reflects Fitch's opinion that risks to both BP's business and financial profile continue to increase following the Deepwater Horizon accident."

Previously Fitch had argued that the Gulf of Mexico oil spill would have limited financial impact on the company. Estimates for the total cost of the oil spill to BP range from $5.3 billion (3.6bn) from Dutch bank ING to $37bn from Credit Suisse.

Yesterday Moody's also cut the group's ratings saying: "Moody's expects these costs to weigh significantly on BP's free cash flow generating capacity and to constrain its ability to focus on other key areas of the company's business in the near to intermediate term."

A BP spokesman said the "Fitch downgrade from AA+ to AA reflects the uncertainty concerning the potential impacts of the oil spill in the Gulf of Mexico. AA is still a very strong rating."