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Shell’s credit rating cut from AA to AA- following £36bn takeover of gas giant BG Group

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Royal Dutch Shell has seen its credit rating slashed following its £36billion takeover of gas giant BG Group.

The credit score of the FTSE 100 oil company – a barometer of its financial strength – was lowered by Fitch from AA to AA-.

Ratings agency Fitch said its outlook on Shell was ‘negative’ in a sign a further cut could follow.

Shell used some of its cash reserves to fund the takeover of BG. Following the completion of the mega-deal on Monday, Shell plans to sell £20billion of assets in the next three years.

However, Fitch warned it downgraded its view on the company because Shell (down 26.5p to 1560.5p) had ‘materially missed the targeted level’ of sell-offs so far. 

Rival rating agency Standard & Poor’s earlier this month warned of the ‘significant likelihood’ that it will cut the rating of several large oil companies. 

Moody’s last month said it is reviewing the credit scores of 175 oil, gas and mining stocks due to the prolonged commodities price rout.

The oil price is close to a 12-year low. The North Sea industry is in crisis as thousands of workers are laid off and salaries cut. 

The global mining sector has also been hit by the slump in commodity prices, dragged down by slowing demand from China, the biggest consumer of commodities such as iron ore and aluminium.

Major oil and mining companies, including Shell, BP, Anglo American and Glencore, have had to sell assets worth billions, slash headcount, record billions of pounds of write-down on the value of their assets and shrink their costs.

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