Exxon Stripped of AAA Rating by S&P
April 26 2016 - 12:40PM
Dow Jones News
After being rated at AAA by S&P since 1967, Exxon Mobil
Corp. was just stripped of the gold-plated top grade by the ratings
firm amid the ongoing price pressures in the oil patch.
S&P had placed Exxon on watch for a potential downgrade on
Feb. 2, following the massive firm's lowest quarterly profit in 13
years, on a day when it cut ratings on 10 of its rivals, including
Chevron Corp. Now, Exxon is expected to post even worse earnings on
Friday, with analysts expecting earnings to hit a 17-year low.
There are now just two U.S. companies S&P has at AAA--fellow
Dow components Johnson & Johnson and Microsoft Inc.
S&P said the company's "credit measures will be weak for our
expectations for a AAA rating due, in part, to low commodity
prices, high reinvestment requirements and large dividend
payments." This as Exxon's debt levels have "more than doubled in
recent years, reflecting high capital spending on major projects in
a high commodity price environment and dividends and share
repurchases that substantially exceeded internally generated cash
flow."
Exxon now bears a AA+ rating. It is back on a stable outlook
from S&P, indicating that no more cuts are in store.
Shares briefly ticked lower on the announcement but have
reversed the move already; they're up 0.3% at $87.63.
This is an excerpt from our Market Talk stream. Market Talk, a
feature of Dow Jones Newswires, provides real-time analysis of
breaking news, as well as running commentary on financial market
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(END) Dow Jones Newswires
April 26, 2016 12:25 ET (16:25 GMT)
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