According to Fitch Ratings, insurance costs related to the BP (NYSE:BP) look like they could be twice what original estimates were, rising to as high a $6 billion.
Fitch's Chris Waterman said at a presentation in Zurich that it could cost the industry from $4 billion to $6 billion. Total economic losses will reach as high as $35 billion, added Waterman.
There was no breakdown of how that would be distributed among companies.
This will be the largest man-made insurance loss since September 11 terrorist attacks.
Showing posts with label Fitch Ratings. Show all posts
Showing posts with label Fitch Ratings. Show all posts
Thursday, October 21, 2010
Tuesday, September 21, 2010
Jefferies Raises Sempra Energy (NYSE:SRE) Price Target, Fitch Wary
News of the sale of RBS Sempra Commodities energy solutions division to Noble Gas and Power Corp. brought mixed reactions, with Jefferies increasing the price target on Sempra Energy (NYSE:SRE) and while Fitch said they're maintaining a negative watch.
Jefferies said the reason they raised the price target from $59.50 to $60, was "We find SRE shares undervalued based on P/E valuation.
The sale of Sempra's remaining interest in the RBS Sempra Commodities JV should allow for a higher multiple on a reduced earnings level due to relatively less risk associated with Sempra's other business units."
They reiterated their "Buy" rating on Sempra Energy as well.
Fitch said they're keeping a negative watch on Sempra for the same reasons Jefferies raised the price target, but their concern is what Sempra will do with the capital.
While they say there could be a downgrade ahead, Fitch said they'll wait for the sale of Sempra's North American wholesale power and natural gas unit before making a decision.
Fitch said the wholesale power and natural gas division could fetch from $640 million to $740 million.
Jefferies said the reason they raised the price target from $59.50 to $60, was "We find SRE shares undervalued based on P/E valuation.
The sale of Sempra's remaining interest in the RBS Sempra Commodities JV should allow for a higher multiple on a reduced earnings level due to relatively less risk associated with Sempra's other business units."
They reiterated their "Buy" rating on Sempra Energy as well.
Fitch said they're keeping a negative watch on Sempra for the same reasons Jefferies raised the price target, but their concern is what Sempra will do with the capital.
While they say there could be a downgrade ahead, Fitch said they'll wait for the sale of Sempra's North American wholesale power and natural gas unit before making a decision.
Fitch said the wholesale power and natural gas division could fetch from $640 million to $740 million.
Wednesday, September 8, 2010
BP (NYSE:BP) Raised Up Three Levels by Fitch Ratings
BP's (NYSE:BP) credit rating got a boost today as Fitch Ratings raised the credit rating of the company by three notches, from BBB to A. That will lower the cost of borrowing if the company chooses to go that route in the future.
The increase in rating included the long-term issuer default rating along with the senior unsecured rating. Fitch also considers BP as being stable in their outlook.
Fitch said the rating increase "reflects both the improved visibility of potential liability scenarios” and “substantial progress that BP has made to date in building up liquidity to address potential financial payments.”
They added that the permanent plugging of the oil leak was a major factor as well.
On June 15 Fitch has cut BP's credit rating six levels to BBB.
The increase in rating included the long-term issuer default rating along with the senior unsecured rating. Fitch also considers BP as being stable in their outlook.
Fitch said the rating increase "reflects both the improved visibility of potential liability scenarios” and “substantial progress that BP has made to date in building up liquidity to address potential financial payments.”
They added that the permanent plugging of the oil leak was a major factor as well.
On June 15 Fitch has cut BP's credit rating six levels to BBB.
Wednesday, August 18, 2010
Marathon (NYSE:MRO) Rating Maintained by Fitch Ratings
Marathon (NYSE:MRO) had its long-term Issuer Default Rating maintained and affirmed by Fitch Ratings, keeping it at 'BBB+' and its short-term IDR and commercial paper were kept at "F2".
Here are the data on Fitch's Marathon ratings: - IDR 'BBB+'; - Senior unsecured credit facility 'BBB+'; - Senior unsecured notes 'BBB+'; - Industrial revenue bonds 'BBB+'; - Commercial paper 'F2'; - Short-term IDR 'F2'.
In a press release, Fitch said, "Approximately $7.9 billion in debt is affected by this ratings action. Marathon's ratings are supported by the company's high liquids exposure in the upstream (>60%); strong downstream presence in the Midwest including a high quality portfolio of midstream transportation and storage assets; and adequate near-term liquidity, generated in part by the completion of its asset sale program, including its 20% stake in block 32 Angola in the first quarter. Key credit concerns center on the potential for high future capex to jump start the growth of the upstream, especially following recent asset sales; the risk of M&A or divestments to change the asset footprint of the company; and the potential impacts of a longer-term moratorium in the deepwater Gulf of Mexico, where Marathon has a modest but growing presence."
Fitch added that under their current commodity price assumptions, Marathon should have a "modestly free cash flow negative in 2010."
Any shortfalls in near term funding should be able to be handled by current cash balances, as Fitch doesn't believe Marathon will increase their debt levels in any significant manner.
Here are the data on Fitch's Marathon ratings: - IDR 'BBB+'; - Senior unsecured credit facility 'BBB+'; - Senior unsecured notes 'BBB+'; - Industrial revenue bonds 'BBB+'; - Commercial paper 'F2'; - Short-term IDR 'F2'.
In a press release, Fitch said, "Approximately $7.9 billion in debt is affected by this ratings action. Marathon's ratings are supported by the company's high liquids exposure in the upstream (>60%); strong downstream presence in the Midwest including a high quality portfolio of midstream transportation and storage assets; and adequate near-term liquidity, generated in part by the completion of its asset sale program, including its 20% stake in block 32 Angola in the first quarter. Key credit concerns center on the potential for high future capex to jump start the growth of the upstream, especially following recent asset sales; the risk of M&A or divestments to change the asset footprint of the company; and the potential impacts of a longer-term moratorium in the deepwater Gulf of Mexico, where Marathon has a modest but growing presence."
Fitch added that under their current commodity price assumptions, Marathon should have a "modestly free cash flow negative in 2010."
Any shortfalls in near term funding should be able to be handled by current cash balances, as Fitch doesn't believe Marathon will increase their debt levels in any significant manner.
Friday, June 18, 2010
BP (NYSE:BP) Credit, Third Downgrade By Moody's
BP's (NYSE:BP) credit rating has been hit with its third downgrade from the rating agency Moody's Investors Service on Friday. They said, "Moody's updated assessment is that the spill will have a sustained negative impact on the groups free cash flow generation and overall financial profile for a number of years." BP dropped from Aa2 to A2, June 3 decline was from Aa1 to Aa2.
Standard and Poors 500 also lowered their rating of BP on Thursday. This is the second downgrade they have given BP in a month from an A to A-1. On Tuesday, Fitch also dropped their rating six notches of BP's long term debt to just above junk level.
David Staples, managing director of Moody's Corporate finance group said," the oil leak has to stop. As long as the oil leak continues, the costs continue to mount and the exposure to litigation continues. BP declined to comment on the downgrade. Staples did say that BP would remain on close review for further future downgrades.
Bryon Grote, BP's Chief Financial officer did say on Wednesday that he hoped the deal struck with the White House would help reinforce their prior rating of AA from Moody's.
Standard and Poors 500 also lowered their rating of BP on Thursday. This is the second downgrade they have given BP in a month from an A to A-1. On Tuesday, Fitch also dropped their rating six notches of BP's long term debt to just above junk level.
David Staples, managing director of Moody's Corporate finance group said," the oil leak has to stop. As long as the oil leak continues, the costs continue to mount and the exposure to litigation continues. BP declined to comment on the downgrade. Staples did say that BP would remain on close review for further future downgrades.
Bryon Grote, BP's Chief Financial officer did say on Wednesday that he hoped the deal struck with the White House would help reinforce their prior rating of AA from Moody's.
Tuesday, June 15, 2010
BP (NYSE:BP) Downgraded from AA to BBB by Fitch Ratings
The downgrading of BP (NYSE:BP) by Fitch Ratings to BBB, ultimately is a result of the pressure to increase the liability of BP in the Gulf oil spill, but also the pressure to pay up earlier.
Whether or not the estimates of U.S. governments scientists is accurate or not, the numbers of between 20,000 to 40,000 barrels a day spilling into the Gulf has increased the potential payout by BP to a much higher amount than originally thought.
Fitch looks at the loss of financial flexibility being a big issue for the company, based largely on the assumption BP will cave in and put billions into an escrow account which would then be used to pay out claims; at least hopefully that's what it'll be used for.
Once the government get access to $20 billion, if that's the amount and BP agrees to do it, they can start paying out all sorts of spurious claims which at best, may have a tenuous connection to the oil spill.
An immediate fallout will also be the increased cause of debt for the company, making it more costly to do business.
Whether or not the estimates of U.S. governments scientists is accurate or not, the numbers of between 20,000 to 40,000 barrels a day spilling into the Gulf has increased the potential payout by BP to a much higher amount than originally thought.
Fitch looks at the loss of financial flexibility being a big issue for the company, based largely on the assumption BP will cave in and put billions into an escrow account which would then be used to pay out claims; at least hopefully that's what it'll be used for.
Once the government get access to $20 billion, if that's the amount and BP agrees to do it, they can start paying out all sorts of spurious claims which at best, may have a tenuous connection to the oil spill.
An immediate fallout will also be the increased cause of debt for the company, making it more costly to do business.
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