Oil industry giant Exxon Mobil has been hit with its first downgrade since the Great Depression, ending its 86-year streak of perfect AAA ratings.
“We get value from our AAA credit rating in our business,” Exxon’s Vice President of Investor Relations Jeffrey Woodbury said during a conference call with analysts before the credit downgrade was announced, Bloomberg reported. “Whether it be access to financial markets or access to resources, there is a benefit that we get from it, and we see it as being important.”
Indeed International Business Times says the difficult operating environment wasn’t all that S&P singled out in its analysis. Also weighing on Exxon’s creditworthiness was the company’s high dividend and share buyback spending.
“The company’s debt level has more than doubled in recent years, reflecting high capital spending on major projects in a high commodity price environment and dividends and share repurchases that substantially exceeded internally generated cash flow,” S&P said.Read the IB Times story here.
Exxon’s track record of doling out billions of dollars to shareholders has long made it a darling stock of investors. Over the past decade, the Irving, Texas-based company has repurchased $210 billion of its own stock, a boon to existing shareholders who see their profit per share increase.