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.
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