Fitch downgrades Origin

Fitch Ratings said it downgraded Origin Energy Ltd.’s long-term foreign-currency issuer default rating to BBB from BBB+ and revised its outlook to stable from negative.

The agency also said it downgraded its foreign-currency senior unsecured rating to BBB from BBB+ and affirmed and withdrew its short-term issuer default rating at F2.

The agency also downgraded Origin Energy Finance Ltd.’s foreign-currency senior unsecured rating to BBB from BBB+ and downgraded Origin Energy Contact No. 2 Ltd.’s preference shares to BB+ from BBB-.

The downgrades are the result of expected reduced earnings diversity following the divestment of Contact Energy Ltd., weaker cash flows and increased pressure on oil prices, Fitch said.

Origin said it will use the Contact Energy sale proceeds to repay debt and redeem preference shares. While the debt reduction is positive, such improvements in credit metrics are modest relative to the earnings pressures faced by the company, the agency said.

Origin’s utility businesses also are facing difficult operating conditions in Australia, although some stabilization is expected, Fitch said.

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