Transocean's (NYSE:RIG) Rating Cut to "Baa3" by Moody's (NYSE:MCO)

Moody's (NYSE:MCO) cut the senior unsecured rating of Transocean (NYSE:RIG) from Baa2 to Baa3.

Moody's vice president Ken Austin, said in a statement, "The downgrade to Baa3 reflects Moody's view that Transocean potentially faces significant liability exposure due to its involvement in the blowout and subsequent oil spill from the Macondo well and a concern as to whether it will be fully protected under its indemnification from BP."

The short-term rating of the company was also downgraded from "Prime-2" to "Prime-3."

As of June 30, Transocean had close to $2.88 billion in cash on hand, and Moody's said with that, they could handle up to $6 billion in obligations if they had to.

If the obligations of Transocean exceed $6 billion, they would have to take on new debt to meet them, and that would hurt the company in relationship to retaining its investment-grade rating.

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.