Exxon Mobil loses its ‘AAA’ rating

Low oil prices have helped cost Exxon Mobil Corp. its pristine “AAA” credit rating from Standard & Poor’s.

The top “AAA” credit rating from S&P means a company’s debt is the safest possible investment. Now only two other U.S. corporations are rated triple-A by S&P: consumer and medical products company Johnson & Johnson and technology company Microsoft Corp.

S&P said Tuesday that it lowered Exxon Mobil’s rating one notch to “AA+” because of low oil prices and the “large dividend payments” the oil giant makes to shareholders. The credit-rating agency said Exxon Mobil is more likely to pay dividends than save money or reduce its debt. Exxon Mobil had held the “AAA” rating since at least 1949, S&P said.

The one-notch downgrade, while symbolic, is more likely to bruise Exxon Mobil’s corporate pride than significantly raise its borrowing costs.

“Even at ‘AA+’ it has the highest credit rating of any energy company and it is higher than pretty much all of corporate America,” said Brian Youngberg, an analyst at Edward Jones.

Another major ratings agency, Moody’s Investors Service, said in February that it was keeping its top “Aaa” rating on Exxon Mobil. But it sounded a cautionary note by lowering its outlook on the rating to “negative” from “stable.”

Exxon Mobil said in a statement that nothing has changed about its “financial philosophy” and that it places a “high value on its strong credit position.”