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S&P downgrades Halliburton, affirms Baker Hughes
[NEW YORK] Rating agency S&P Global on Wednesday downgraded oil services provider Halliburton by one notch to A- following the termination of a merger agreement with rival Baker Hughes.
Halliburton will have to pay a US$3.5 billion termination fee to Baker Hughes, according to their merger agreement.
S&P warned it may downgrade Halliburton again as it placed the ratings on watch negative. It cited the company's high debt levels, and potential further weakening in its financial measures.
In a separate announcement, S&P affirmed Baker Hughes's A rating and moved its outlook from negative to stable on expectations that the company will pursue modest financial policies and aggressive cost reductions.
Baker Hughes previously said it will use US$1.5 billion of the termination fee received by Halliburton to buy back stock and US$1 billion to repay outstanding debt.