Gulf Coast States' Credit Status Unhurt So Far By Spill--S&P

DOW JONES NEWSWIRES The credit-worthiness of state and local governments along the Gulf Coast thus far hasn't seen "major damage" as a result of effects from the ongoing oil spill, in part because of payments already made and expected in the future from BP PLC (BP, BP.LN), said Standard & Poor's Ratings Services. But depending on how long the spill lasts (company officials are targeting next month) as well as where it spreads (tar balls have begun washing ashore in Texas, the last of the Gulf Coast states to see them) pressures could intensify, S&P said in a report released Tuesday. It also cited the scope of long-term environmental degradation as a government pressure over time. Although tourism, fishing, shipping, and energy businesses are likely to "be most affected by the oil spill, we believe that in the near term, the Gulf states, where these industries are important, will retain their current credit ratings," said analyst Horacio Aldrete-Sanchez. "So far, the fiscal damage from the oil spill has been manageable for Gulf states and localities." S&P said in a new report that "financial difficulties faced by state and local budgets so far has been manageable due, we believe, to BP's direct payments and spending by the cleanup workers in the region. We also believe that reimbursements from the company's $20 billion escrow fund...are likely to help limit future economic damage." -By Jodi Xu, Dow Jones Newswires; 212-416-3037; jodi.xu@dowjones.com (END) Dow Jones Newswires July 06, 2010 11:59 ET (15:59 GMT)