The global crude explorer, with sales that dwarf the economies of most nations, sought to retain the AAA rating when S&P placed it on notice in February.
It comes as Saudi Arabia said it planned a massive initial public offering of shares in its state-owned oil giant Aramco.
Citing concern credit measures would remain weak through 2018, S&P warned Exxon it was in danger of losing the top grade first bestowed on the oil giant in 1930 and shared with just two other US corporations.
The rating was lowered to AA+, S&P said in a statement yesterday.
The oil-market crash that began in late 2014 has choked crude-producing nations like Nigeria and Venezuela of cash, thrown hundreds of thousands of employees out of work, stalled drilling and pipeline investments around the world and even reverberated into ancillary industries such as steel-making and railroads.
Exxon was one of the last holdouts against the wave of credit downgrades that engulfed oil drillers with diminishing prospects of paying debts, dividends and rig fees.
The downgrade will not only raise Exxon’s cost to borrow money but may also erode its status among oil-rich governments as a premier partner with which to do business.
As Exxon vice president of investor relations Jeffrey Woodbury said in February, the company’s AAA rating has been a key selling point when competing for drilling licenses.
Saudi Arabia’s Deputy crown prince Mohammed bin Salman said he expects the value of Saudi Arabian Oil Company to exceed $2 trillion (€1.77 trillion) as the kingdom prepares to sell part of the company in what could be the world’s largest IPO.
The valuation of the oil producer known as Saudi Aramco hasn’t been completed, Prince Mohammed said.
The government plans to turn Aramco into a holding company and will sell less than 5% of that entity, he said. Aramco units may be offered for sale at a second stage, he said
“Only the oil reserves could be worth about $2.5 trillion at $10 oil price, so a valuation of $2 trillion for all of Saudi Aramco is quite cheap,” Danilo Onorino, an energy-focused portfolio manager at Dogma Capital said.
Prince Mohammed is leading the biggest economic shakeup since the founding of Saudi Arabia in 1932.