25 May S&P Global cuts outlook on ExxonMobil to negative
Credit rating agency S&P Global has cut its outlook on ExxonMobil (NYSE:XOM) to negative, warning that it may downgrade the oil major’s double-A plus rating over the next two years.
This latest blow comes after S&P stripped Exxon of its long-held triple-A rating, as the US multinational suffered dips in profit amid weakened oil prices.
S&P analysts said they expect Exxon to reduce its debt at a slower pace than previously expected in the coming years, which shaped the downgrade of its credit rating to negative.
At the end of the first quarter of 2017, Exxon’s total debts stood at US$43.6 billion, a significant increase on the $29.1 billion recorded at the end of 2014.
The subsequent crash in the price of oil has had a sustained impact on the profitability of Exxon and other major global oil players, although prices have stabilised to around $54 a barrel this year.
Carin Dehne-Kiley, an analyst with S&P, said: “Although ExxonMobil significantly reduced capital spending in 2015 and 2016 in response to lower commodity prices, it continued to grow dividends, leading to large discretionary cash flow deficits, and an uptick in debt.”