>>Fitch downgrades BP for ongoing oil spill in the Gulf - Rallies, LOL
CNNMoney - Aaron Smith - 29 minutes ago
NEW YORK (CNNMoney.com) -- BP's debt ratings, a key indication of the corporate world's outlook for the company, was downgraded Thursday by Fitch Ratings for the failure to plug a massive oil leak in the Gulf of Mexico.
Fitch downgraded two key BP debt ratings to "AA" from "AA-plus" and placed the company on watch for further lowering.
Fitch, a rating agency headquartered in New York and London, said the economic and environmental damage from the sunken Deepwater Horizon rig is expected to continue, and the leak is unlikely to be plugged any time soon.
The agency estimated that BP's cleanup costs could total $2 billion to $3 billion in 2010 "depending on how much oil reaches the U.S. shoreline."
"The company has so far repeatedly failed to stop the resultant oil leak and has instead reverted to containment methods that are yet to be fully implemented and are subject to potential weather-related disruption," said Fitch, in a written statement.
Fitch said "the drilling of relief wells also poses risks and additional time may be required for them to be fully effective." A criminal and civil investigation announced Tuesday by Attorney General Eric Holder puts further pressure on BP, the rating agency said.
As a result, said Fitch, "risks to both BP's business and financial profile continue to increase."
The Deepwater Horizon rig that exploded and sank off the Louisiana coast in April, killing 11 workers, is 65% owned by BP. Originating from the ocean floor nearly a mile below the surface, the leak is spilling up to 19,000 barrels per day into the Gulf.
Since the April 20 accident, BP (BP) shares have plummeted more than 40%.
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