BP Plc's credit rating was slashed by major credit ratings agencies on Thursday for its failure to plug a month-long oil leak in the Gulf of Mexico.
Moody's Investor Service and Fitch Ratings downgraded BP's debt, due to the significant amount of money BP is expected to spend to contain the oil spill, clean up the affected region, as well as probable liabilities from lawsuits filed by the U.S. government as well as U.S. businesses.
"Moody's expects these costs to weigh significantly on BP's free cash flow generating capacity and to constrain its ability to focus on other key areas of the company's business in the near to intermediate term," said Moody's in a research note.
BP was also put on notice for a possible further downgrade. Moody's expressed concern over BP's future business prospects in the United States and the Gulf of Mexico, where it is the largest oil producer.
BP, the world's largest oil producer, has lost 32 percent of its value by market capitalization since the beginning of the year.