Louisiana deep oil drilling disaster

[Jan Klimkowski]

Cue more British paranoia as pension funds will now find it very difficult to hold BP shares.

BP credit rating slashed as oil spill costs mount
Fitch ratings agency concerned about short-term costs
BP rating cut from AA to BBB
Head of BP America to appear before Congress today

BP's credit rating has been slashed by Fitch to just two notches above junk status, as the potential cost of the Gulf of Mexico oil spill continues to escalate.

Fitch cut its rating on BP from AA to BBB this morning, a day after US politicians demanded the company deposits $20bn (£13.58bn) in an escrow account to cover the cost of the Deepwater Horizon disaster.

The ratings agency said it was concerned that the balance between long-term and near-term cost payments would become "skewed much more heavily towards the near-term than previously anticipated" if the escrow account was created. Fitch also said it was concerned that BP will find it hard to access the capital markets for funding while the full cost of the oil leak remains unclear.

"In addition, Fitch would be surprised if BP did not suspend quarterly cash dividend payments until the operational and financial impact of the incident is clearer," it added.

Fitch's downgrade could make it more expensive for BP to borrow, especially if the other ratings agencies follow its lead. The company has around $5bn of cash reserves, and has spent more than $1.6bn fighting the spill.

http://www.guardian.co.uk/business/2010/...pill-costs