Moody’s shifts Exxon Mobil view to negative

Moody’s Investors Service said it changed Exxon Mobil Corp.’s outlook to negative from stable. Moody’s affirmed the company’s and its guaranteed subsidiaries’ Aaa issuer and senior unsecured rating.

“Exxon Mobil’s negative outlook reflects the company’s substantial negative free cash flow and expected reliance on debt to fund its large growth capital spending program. We forecast debt to rise, despite some potential mitigation from asset sales, causing Exxon Mobil’s credit metrics to weaken for the next few years,” said Pete Speer, a Moody’s senior vice president, in a press release.

The agency estimates the company’s negative free cash flow to be about $7 billion in 2019 and $9 billion in 2020.

“Negative free cash flow is likely to continue in 2021, with the company’s debt levels rising materially even if the company achieves it targeted asset sales of $15 billion over the period. The company’s high level of growth capital investments cannot be funded with operating cash flow and asset sales at projected levels given Exxon Mobil’s substantial dividend payout, absent meaningfully higher commodity prices and earnings from downstream and chemicals,” Moody’s said.

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