BP suffers credit rating downgrade
BP has today experienced the second of the "big three" credit rating agencies downgrading the company's rating. Moody's Investors Service has downgraded the company's senior unsecured credit rating from Aa1 to the Aa2 which follows on from the AA+ to AA downgrade by Fitch Ratings. Both of the credit rating agencies are concerned about the damage which the ongoing Gulf of Mexico oil crisis is doing to the company's reputation and its balance sheet.
The problem for investors is the fact that nobody has any idea how much it will cost to clean up the disaster and there are literally multibillion-dollar lawsuits stacking up by the day. When you also take into account the fact that the US government has also announced plans for a criminal investigation into the disaster then perhaps it is not difficult to understand why the company's credit rating has been affected. The simple truth is that uncertainty is a major problem in the investment world and with BP and the Gulf of Mexico crisis this is currently available in abundance.
The crisis is set to continue until August at the earliest which will give more than enough time for the crisis to cause more damage to the company's balance sheet and its reputation. Today's downgrades are unlikely to be the last.
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