Moody’s downgrades Eni, debt

Moody's Investors Service said it downgraded Eni SpA's issuer rating and ratings on the long-term debt of its guaranteed subsidiaries to Baa1 from A3.

The agency also affirmed the Prime-2 short term ratings of Eni and guaranteed subsidiaries, including Eni Finance USA Inc. and eni finance international SA.

In addition, Moody's downgraded the unguaranteed senior debentures of wholly owned subsidiary, Eni USA Inc. to Baa2 from Baa1.

The outlook on all ratings is stable. This action concludes the review for downgrade announced on Jan. 22, in a sector-wide review prompted by the fall in oil prices and weak industry conditions.

"Eni's operations and credit metrics will be weak in 2016 and 2017 as low oil prices and weak downstream gas markets continue to take a toll on the company's cash flow," Moody’s senior vice president Tom Coleman said in a news release.

"We view Eni's upstream growth story positively and expect that new lower-cost production scheduled to come on stream in 2016/2018, as well as rising prices, will lead to improvements in the company's pressured cash flow-based credit metrics in 2017 and beyond. Asset sales will help Eni to cap borrowing requirements and bridge the projected negative free cash flow over 2016/2018."

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