Bp’s Shift to Debt Reduction Mode Faces Headwinds: Credit Video

BP has shifted its focus back onto the balance sheet with the suspension of share buybacks and delivery of the disposal program making the lower-end of the $14-18 billion net debt target by 2027 look achievable. However, the positive credit implications could be limited to maintaining BP's status as a single-A category issuer- as high debt adjustments dampen the impact on leverage ratios and make ratings of A1 from Moody's and A+ from Fitch look like a ceiling. Bond and hybrid spreads have already closed in on peers rated at this level or higher, which limits the scope for further tightening. Paul Vickars, senior credit analyst at Bloomberg Intelligence, discusses the implications for credit quality and bond/hybrid spreads in this short video to accompany the updated credit primer.