S&P warns Exxon, Chevron and other oil firms it may cut their credit ratings
S&P Global Ratings has put some of the biggest oil companies in the world on notice that it could soon downgrade their credit ratings thanks to heightened concerns about climate change and a global push towards greener energy.
The agency – one of the three most influential ratings firms in the world – said it could downgrade the ratings of Chevron, Exxon, Shell and Total among others.
It downgraded the outlook, although not the rating, for both BP and Canadian firm Suncor Energy to “negative”. This means S&P could cut their ratings in the future, although a change is not necessarily imminent.
Credit ratings are very important to big firms, as they heavily influence the costs they face when they borrow in financial markets.
A downgrade usually causes the cost of borrowing to rise. And it can mean that some investment funds are no longer allowed to hold a company’s bonds.
S&P Global Ratings has downgraded its view of the whole oil and gas industry to “moderately high risk”. It said this reflects “our evaluation of increased and likely increasing risks for oil and gas producers”.
The agency said fossil fuel companies face “significant challenges and uncertainties engendered by the energy transition, including market declines due to growth of renewables”. [Continue reading…]