Moody?s downgrades Halliburton debt, stock up on buyback deal

Moody's Investors Service has downgraded Halliburton's debt rating from stable to negative.

Although Halliburton Co. (NYSE: HAL) has made progress in settling some of the uncertainty related to its role in the Deepwater Horizon disaster, a share buyback deal has lead analysts at Moody?s Investors Service in New York to downgrade the company?s debt outlook to negative.

The rating followed news on Friday of the Houston oilfield services giant?s plan to buy back up to $3.3 billion of its own stock, and that Halliburton had pleaded guilty to destroying evidence in the 2010 oil spill disaster.

"The negative outlook reflects Halliburton's more aggressive financial posture evidenced by debt funded common stock repurchase activity and a higher anticipated leverage profile," said Moody?s vice president and senior analyst Michael Somogyi in a statement.

Nonetheless, at Morningstar Inc. in Chicago, analysts had a different take on the buyback ? and the markets reacted positively to the news, pushing Halliburton shares up more than 4 percent to $46 in late-afternoon trading Friday.

?We see the buyback as an attractive use of capital,? analyst Stephen Ellis said in an investors note. ?In addition, we believe the buyback illustrates Halliburton's confidence in the stability of its business going forward.?

Both analysts said there is work that remains before the Deepwater Horizon uncertainty will conclude.

"While the company has made progress in defining its liability exposure related to Macondo, there is still uncertainty surrounding the settlement of private claims stemming from the Macondo multi-district litigation," Somogyi said.

Deon Daugherty covers energy and law for the Houston Business Journal. Read the top Texas energy news in our free weekly newsletter, Energy Inc. Subscribe to the Energy Inc. newsletter. For her breaking stories, follow her on Twitter.

Source: http://feeds.bizjournals.com/~r/bizj_houston/~3/bs2Y2unBEKE/moodys-downgrades-halliburton-stock.html

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