THURSDAY, March 28, 2024
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S&P strips ExxonMobil of triple-A rating

S&P strips ExxonMobil of triple-A rating

NEW YORK - Standard and Poor's stripped ExxonMobil of its triple A rating Tuesday, saying the oil giant's rising debt and weaker earnings outlook meant it no longer qualified for the highest credit grade.

The one-notch cut was the latest ripple effect on the oil industry from crashing crude prices, which have forced a number of smaller producers into bankruptcy.
ExxonMobil, the largest US oil company and the world's fifth largest, had held the triple-A rating since 1930. The downgrade leaves just two US companies with triple-A credit ratings, Microsoft and Johnson and Johnson. 
S&P noted that ExxonMobil's capital debt has more than doubled in recent years as it executes a number of major exploration and production projects to increase oil and gas output capacity.
The ratings agency also expects ExxonMobil will continue to return large sums to shareholders through dividends and stock buybacks, further pressuring its financial position.
"Despite the favorable effect of lower service costs and improved efficiencies, we believe that maintaining production and replacing reserves will eventually require higher spending," S&P said.
"As a result, we expect leverage to remain weaker than levels consistent with a 'AAA' rating, and we believe that lowering ratings to 'AA+' is appropriate."  
S&P said the outlook for ExxonMobil is stable, reflecting the expectation that the company "will continue to follow moderate financial policies of low leverage and responsible capital stewardship." 
ExxonMobil said it was confident of its outlook.
"Nothing has changed in terms of the company's financial philosophy or prudent management of its balance sheet," the company said.
"ExxonMobil places a high value on its strong credit position and continues to be focused on creating long-term shareholder value despite near-term market volatility."
- AFP 
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