By Tyler Durden at ZeroHedge
Exxon Mobil has been rate AAA by S&P since 1930 according to Bloomberg. Today that ended as the global crude explorer with sales that dwarf the economies of most nations was cut to AA+ (Outlook stable). Having been put on notice in February (negative watch), citing concern that credit measures would remain weak through 2018.
Credit measures will be weak for a AAA rating due, in part, to low commodity prices, high reinvestment requirements and large dividend payments, S&P says.
Maintaining production and replacing reserves will eventually require higher spending, S&P says.
Greatest business challenge is replacing co.’s ongoing production, S&P says.
XOM stock is sliding and weighing on The Dow (back below 18,000).
As Bloomberg reports,
The oil-market crash that began in late 2014 has choked crude-producing nations like Nigeria and Venezuela of cash, thrown hundreds of thousands of employees out of work, stalled drilling and pipeline investments around the world and even reverberated into ancillary industries such as steel-making and railroads. Exxon was one of the last holdouts against the wave of credit downgrades that engulfed oil drillers with diminishing prospects of paying debts, dividends and rig fees.
The downgrade will not only raise Exxon’s cost to borrow money but may also erode its status among oil-rich governments as a premier partner with which to do business.
As Exxon Vice President of Investor Relations Jeffrey Woodbury said in February, the company’s AAA rating has been a key selling point when competing for drilling licenses.