ExxonMobil loses coveted AAA credit rating from S&P on low oil prices

Exxon Mobil's credit rating cut

Standard and Poor's downgraded ExxonMobil's credit rating from AAA to AA+ on Tuesday because of expectations of continuing low oil prices.

S&P told CNBC that it has had a AAA rating on Exxon since July 5, 1949. The move leaves only Microsoft and Johnson & Johnson with AAA ratings from S&P.

Shares of ExxonMobil were flat on the day.

In its announcement, S&P said that it expects Exxon's "credit measures, including free operating cash flow (FOCF) to debt and discretionary cash flow (DCF) to debt, will remain below [its] expectations for the 'AAA' rating through 2018." The ratings agency added that its outlook on Exxon is stable.

S&P added that the "company's debt level has more than doubled in recent years, reflecting high capital spending on major projects in a high commodity price environment and dividends and share repurchases that substantially exceeded internally generated cash flow."

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S&P also said that while Exxon has made efforts to reduce capital spending, the maintenance of production and replacing reserves will ultimately require more spending.

The ratings agency said it sees Exxon returning cash to shareholders instead of building cash or reducing its debt, which could limit improvements on credit measures even when oil prices recover.

However, S&P's stable outlook on the big oil company reflects the rating service's confidence in Exxon's "fiscally prudent manner" in its investments and acquisitions. S&P did add that it could further lower its rating on Exxon if the company isn't able to sufficiently adapt to a prolonged period of low commodity prices.

"Nothing has changed in terms of the company's financial philosophy or prudent management of its balance sheet. ExxonMobil places a high value on its strong credit position and continues to be focused on creating long-term shareholder value despite near-term market volatility," an Exxon spokesman told CNBC in an email.