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June 15, 2010    

Fitch cuts BP credit rating amid debt fears

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by Kay Murchie
Fitch cuts BP credit rating amid debt fears

Credit rating agency Fitch has today downgraded BP’s rating by six notches, from AA to BBB.

The downgrade comes as the oil giant continues to battle to contain the oil leak in the Gulf of Mexico which has resulted in the company’s shares plunging in value.

Commenting on the downgrade, Fitch said it is concerned about BP’s ability to repay its debts as the clean-up operation and legal costs soar.

So far, BP has spent $1.6 billion (£1.1 billion) in its effort to contain the major oil spill.

The company is under severe pressure from the US Government to suspend its dividend payments to shareholders to pay for the clean-up costs.

However, BP has continued to reassure major shareholders that dividends will be paid as normal. The company’s dividend payment accounts for £1 in every £7 paid out to UK pension funds.

Company executives are due to meet US President Barack Obama tomorrow to discuss the matter.

The disaster started after an explosion on a BP oil rig on 20 April, which left 11 workers dead.

Two days later, oil began to leak into the Gulf of Mexico from the damaged well and BP has been battling to contain the leak.

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