Moody’s drops ConocoPhillips to A2

Moody's Investors Service said it downgraded ConocoPhillips' (COP) senior unsecured and other long-term debt ratings to A2 from A1.

At the same time, the agency affirmed the Prime-1 short-term commercial paper ratings of ConocoPhillips and ConocoPhillips Qatar Funding Ltd, as well as the short-term ratings of guaranteed industrial revenue bonds.

The outlook was changed to stable from negative.

Ratings downgraded include the long-term debt ratings of ConocoPhillips, ConocoPhillips Co., ConocoPhillips Holding Co., Conoco Funding Co., ConocoPhillips Canada Resources, ConocoPhillips Canada Funding Co. I, ConocoPhillips Canada Funding Co. II, Tosco Corp., Burlington Resources, Inc., Burlington Resources Finance Co., Polar Tankers, Inc., Louisiana Land and Exploration, and guaranteed industrial revenue bonds Valdez, Alaska.

"The ratings downgrade reflects Moody's expectation that COP's financial leverage will remain high through 2017, with the company increasing its debt levels to fund negative free cash flow," Moody's vice president Gretchen French said in a news release.

"We positively note that in the face of a weak commodity price environment, COP has taken a number of steps to lower its cost structure, increase its financial and operating flexibility, and maintain a strong liquidity profile. However, the A2 rating positions the company with more flexibility within the rating and relative to its peers."

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