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Sunday 20th of June 2010
June 18, 2010    

Moody’s join other agencies and downgrades BP’s credit rating

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by Kay Murchie
Moody’s join other agencies and downgrades BP’s credit rating

Oil giant BP suffered another blow today after Moody’s credit rating agency downgraded the company’s credit rating by three notches, from A2 to Aa2.

The downgrade follows similar moves from the two other major international credit ratings agencies, Fitch and Standard & Poor’s, who also downgraded the company‘s rating.

In a statement today, Moody’s said it “has today downgraded the senior unsecured ratings of BP and of all long-term debt securities issued by its subsidiaries and guaranteed by BP by three notches to A2 from Aa2.”

On Wednesday, it was revealed that a $20 billion (£13.5 billion) compensation fund for victims of the Gulf of Mexico oil leak is to be set up.

Details of the fund emerged following talks at the White House after BP’s chief executive Tony Hayward and chairman Carl-Henric Svanberg, were summoned by US President, Barack Obama.

Meanwhile, the company’s chairman, Mr Svanberg, has also confirmed that dividends would not be paid for the remainder of this year.

This year’s first dividend payment of $2.6 billion was due next week, but has now been scrapped and this is the first time that BP has withheld the dividend since World War II.

The company’s dividend payment accounts for £1 in every £6 paid out to UK pension funds so this will come as a major blow to many.

In the meantime, clean-up and legal costs are soaring and last week, Standard Chartered warned that the total cost to the company could exceed $40 billion (£27 billion).

The incident 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 since been battling to contain the leak.

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