ORIGIN Energy debt has been downgraded to a notch above junk status after ratings agency Standard & Poor’s recently cut its oil price forecasts.
The agency said Origin (ORG) had not taken enough action to protect its balance sheet against low oil prices amid its high exposure to the US$US24 billion Australia Pacific LNG plant at Gladstone.
Standard & Poor’s left its ratings on Santos (STO), whose shares have been under pressure on concern it would raise equity to support an investment grade credit rating, and Woodside Petroleum (WPL).
“The (one-notch) downgrade, to ‘BBB-’ primarily reflects our view that Origin Energy’s leverage will remain high for longer than we expected because of recent heavy investments,” Standard & Poor’s analyst Thomas Jacquot said today after reviewing Origin’s debt in the light of reduced crude oil forecasts.
“Moreover, in our opinion the company has not taken any positive action to support its balance sheet despite the weakening in its operating environment mainly due to lower oil prices, while its capital commitment to the Australia Pacific Liquefied Natural Gas project remains high.”
Standard & Poor’s kept its BBB rating on Santos, saying Santos had made moves to reduce capital expenditure and secure a US$1 billion loan to protect liquidity. – The Australian Business Review