Shell: S & P’s lowers rating and outlook of the debt. – Zonebourse.com

Indented 3.8% this morning in Amsterdam, to 19.2 euros, the share of the petro-gas major Royal Dutch Shell was one of the largest declines in the index AEX 25 (- 1.5%) after the rating downgrade of its debt by a rating-credit agency, Standard & amp; Poor’s (S & amp; P’s). And a placed under review with negative implications that can predict a further reduction. The cause: a barrel of Brent, which is unlikely to exceed the 40 dollars by the end of the year, and the consequences of the acquisition of BG Group

Last night, in fact, as part of. a note on the sector ‘majors’, the Standard & amp rating-credit agency; Poor’s downgraded a notch debt rating of Royal Dutch Shell to ‘AA-’ to ‘A +’, which makes it out of the category of ‘papers of high quality (‘ high grade ‘).

It’s not all: S & amp; P’s also assigned to the new note Shell negative outlook, which may presage a further deterioration. The rating Shell is also not alone in this: BP notes, Eni, Repsol, Statoil and Total could also be lowered shortly

Indeed, the. Agency ‘rating’ has lowered its forecast for oil prices: it now expects Brent crude is trading at $ 40 during the remainder of 2016, before $ 45 in 2017 and $ 50 thereafter. Which mechanically weigh on cash flows.

As a result, debt ratios’ majors’ should remain under the S & amp guidelines; P’s for longer than expected, or ‘two to three years old, before the sector adapts to a lower price environment

Accuracy:. S & amp; P’s indicates that the degradation of a notch of the rating is due to the lowering of the prospects of the oil market, not the acquisition of BG Group. The decision by S & amp; P’s reflects the impact on the cash flow of the group of lower oil prices. As a result, debt ratios and Shell’s profits should improve less than expected by 2018. S & amp; P’s also points out that after the dividend and investment, cash flow will be negative until 2017.

However, the surveillance of the new note with negative implication is she attributed to BG Group. Analysts said BG Group shares should be delisted in February. This could presage a new one notch downgrade of the debt of Shell as the BG debt will be consolidated by the group. Another factor is “the uncertainty surrounding the results that can be expected from this transaction, which strongly depends on industry conditions,” warns S & amp; P’s. Gare including excess capacity on the side of liquefied natural gas (LNG), and the cost of Brazilian offshore projects, two of the arguments put forward by Shell to buy BG.

The consequences of buying BG Group will be reviewed after the completion of the transaction, by June, says S & amp; P’s.

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