NEW YORK (TheStreet) -- Moody's has downgraded BP's (BP) - Get Report senior unsecured ratings and all subsidiary-issued long-term debt securities by three notches to A2, reflecting concerns that costs from the oil spill could get worse.
Moody's expects the spill to hurt BP's free cash flow generation and financial profile for years, and warns that it may cut the company's debt ratings even further.
On a positive note, the agency agrees the agreement between the oil giant and U.S. government to create a $20 billion fund by BP is manageable for the company and an encouraging development; though not necessarily freeing BP from a cap in potential liabilities.
Moody's has also reduced BP Finance's senior unsecured issuer rating by three notches to A3, and BP North America's senior unsecured issuer rating by four notches to Baa1.
More on BP Dividend Cut Makes BP a Buy
-- Reported by Andrea Tse in New York
Follow TheStreet.com on
and become a fan on
Copyright 2010 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.