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LONDON (Alliance News) - Moody's Investors Service Tuesday said it has affirmed the A2 long-term debt and Prime-1 commercial paper ratings for BP PLC, but changed the outlook to negative following a US District Court ruling that BP was grossly negligent in its response to the Macondo accident and oil spill of April 2010.
"The negative rating outlook recognizes that while the amount and timing of future cash outlays is uncertain, the court's ruling sets the stage for a Clean Water Act liability that could be up to the statutory maximum of USD18 billion. This is considerably higher than the USD3.5 billion CWA fine BP has already provisioned for, and would take total Macondo costs after taxes well beyond the USD40 billion threshold and scope of a stable outlook," Moody's wrote in its report.
It said it had reaffirmed its ratings on BP's debt and commercial paper based on the company's strong
financial position and liquidity, and the recognition that the USD18 billion liability is a maximum worst case outcome under the Clean Water Act.
"In addition, numerous unresolved issues need to be addressed and subject to appeals that could take years to settle. Despite the large headline amount, this fine is only a potential outcome and the final amount will be subject to consideration of mitigating factors under the CWA, which
could result in a lower actual fine," Moody's added.
BP shares were down 1.2% at 463.10 pence Tuesday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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