BP debt downgraded on credit risks from Gulf spill

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Ratings firms Fitch Ratings and Moody's Investors Service each downgraded BP PLC's long-term credit ratings one notch Thursday and warned that further downgrades are possible as the company's liability for the oil spill in the Gulf of Mexico escalated into billions of dollars and it faced a criminal investigation in the U.S.

The move came as BP completed a second cut on a fractured pipe, a key step in its latest effort to stem the flow of oil from its damaged well. Engineers were seeking Thursday to install a containment device that officials hope will send the majority of the oil to a ship on the water's surface a mile above.

BP shares firmed 0.6% in London, and the cost of insuring BP debt against the risk of default contracted in New York dealings.

Fitch downgraded its rating on BP's long-term debt to double-A from double-A-plus and gave a negative outlook. Moody's reduced its rating to Aa2 from Aa1 and placed it under review for further possible downgrade.

"Double-A is still a very strong rating," a BP spokesman said in response to the Fitch downgrade. "We look to maintain a strong balance sheet as set out in our financial framework. We regard the framework as prudent and have no plans to change it."

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