S&P Cuts Rating for TNK-BP

Standard & Poor's on Wednesday became the second major international ratings agency to downgrade its expectations for TNK-BP over its shareholder dispute.

S&P said it had lowered its long-term corporate credit and senior unsecured debt ratings on TNK-BP to BB from BB+ with a negative outlook.

"The downgrade reflects our significant concerns over the major governance issues at TNK-BP in light of the stalemate between 50/50 partners BP and Alfa-Access-Renova, notwithstanding TNK-BP's robust cash flow generation forecast for 2008, and adequate liquidity at end-June 2008," S&P said.

It said the downgrade also reflected the increased unpredictability of TNK-BP's strategic direction and financial policies and the heightened risk of future control issues and adverse legal and regulatory action.

It also noted the risk of delays to new strategic investments and therefore the risk of a decline in oil production in 2009.

S&P affirmed its B short-term corporate credit rating on TNK-BP.

On Tuesday, Moody's Investors Service downgraded its outlook on TNK-BP Baa2 ratings to "developing" from "stable," citing the shareholder battle.

Problems at TNK-BP have been escalating during the last few months with BP and four Soviet-born billionaires, grouped in the AAR consortium, clashing publicly over strategy and management at the country's third-largest oil producer.