Total: S & P’s lowers rating, negative outlook. – ABC Bourse

 (CercleFinance.com) – As part of a sector rating, the rating-credit agency Standard & amp; Poor’s (S & amp; P’s) downgraded by one notch the rating of long-term debt Total, the French oil & natural gas major, as well as BP and Statoil. The prospect associated with the total score is more negative, which may presage a new drop a notch within 18 months.

In general, these decisions reflect the consequences of weak oil prices on cash flow and the debt of concerned groups to 2017. S & amp; P’s the assumption of a Brent barrel $ 40 by the end of 2016, before $ 45 in 2017 could 50 dollars in 2018.

‘We consider the decision to reduce investment and increase debt to facilitate returns to shareholders negative credit point of view ‘, written especially S & amp; P’s’ in that the decline in capital spending will affect the future generation of cash’.

S & amp; P’s notes that over the first three ‘majors’ Europe, Shell, Total and BP, have not reduced ‘aggressively’ the amount of their dividends or that their investments, unlike some American oil.

Same for asset sales, which reduce all the cash outflows but which, according to S & amp; P’s, and beyond the usual execution risk, should become more size modest, not to mention a possible price drop

in terms specifically of Total, S & amp;. P’s rating of ‘resilience’ operational accounts in 2015, improved Downstream profitability offsetting in part the sharp decline in Upstream. Net debt has also declined, mainly as a result of disposals. But operating cash flow, however, dropped 22% last year ‘and expected to remain low in 2016′.

Thus, the rating given by S & amp; P’s to the French group down a notch to ‘AA-’ to ‘A +’, which the passing of the said category of high quality ( ‘high grade ‘) in the upper-medium grade (‘ upper medium grade ‘).

‘The negative outlook for the note reflects in particular the small margin of maneuver available to the group in 2016. We could degrade within 6 to 18 months, the note of the Total Debt ‘a’ ‘, said S & amp; P’s, one notch lower still.

S & amp; P’s could for example put his execution threat if the ratios of cash flow / debt deteriorated even if the acquisitions were financed by debt, or if less than half of the shareholders chose payment of dividend.

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