Halliburton and Baker Hughes down to Baa1 from A2
June 3 (Reuters) – Ratings agency Moody’s downgraded oilfield service providers Halliburton Co and Baker Hughes Inc, about a month after a deal between the two companies was torpedoed by opposition from U.S. and European antitrust regulators.
Moody’s Investors Service downgraded both the companies’ senior unsecured rating to Baa1 from A2.
“Debt incurred to finance its failed bid to acquire Baker Hughes Inc together with the negative impact on profitability and cash flow of the very weak oilfield services environment have eroded HAL’s credit metrics to levels which no longer support its A2 rating,” Moody’s Vice President Andrew Brooks wrote. (http://bit.ly/1Ps9LE6)
Moody’s downgraded Baker Hughes, citing the failed deal, elevated leverage and developing business model. (http://bit.ly/1PscT2I)
Halliburton agreed to pay a $3.5 billion breakup fee after its $28 billion deal to buy Baker Hughes was scrapped in May.
Baker Hughes announced a $2.5 billion plan to buy back stock and pay down debt using the money. Halliburton said it would consider acquisitions to bolster its weaker businesses.
Oilfield service providers’ profitability has been eroded after a crash in crude prices forced oil companies to reduce drilling and capital spending.
(Reporting by Arathy S Nair in Bengaluru; Editing by Don Sebastian)