ExxonMobil had the outlook on its top-notch debt rating lowered by Moody’s Investors Service Inc. to “negative” due to a “substantial” cash burn to fund growth, Bloomberg reports.
The oil major’s credit metrics will probably weaken over the next few years as it pursues a rebuild of its upstream portfolio, as well as new chemical facilities and refinery upgrades, Moody’s said in a statement Tuesday. The outlook on its Aaa rating was reduced from stable.
“ExxonMobil’s negative outlook reflects the company’s substantial negative free cash flow and expected reliance on debt to fund its large growth capital spending program,” Peter Speer, a senior vice president at Moody’s, said in the statement. Debt will likely rise despite asset sales, he said.
Over the past 10 quarters, ExxonMobil has frequently spent more cash on its operations and dividends than it generated as it ramps up mega projects. CEO Darren Woods says now is a good time to be investing while rivals are retreating. But investors are wary, with the stock underperforming rivals over the past five years.
The change in the company’s credit rating comes just days before it is scheduled to announce the initial economic impacts and early construction of its more than $500 million polypropylene project in Baton Rouge. Read the full story from Bloomberg.
