OIL and gas producers Santos and Origin Energy are adamant they can navigate their current periods of high capital expenditure without fresh equity raisings, despite a new interpretation from Standard & Poor's that puts extra pressure on their balance sheets.
Ratings agency S&P on Tuesday announced it had changed its treatment of hybrid issues held by the likes of Santos, Origin, AGL Energy and Tabcorp.
The issues, which had previously been classified as 100 per cent equity, will now be classified as between 100 per cent and 50 per cent debt.
The move to reclassify Santos' E1 billion ($1.2bn) hybrid entirely as debt also prompted S&P to place the Adelaide-based company on credit watch with a negative outlook, signalling a high likelihood that Santos' credit rating will be downgraded.
The change -- widely expected after a review was announced by S&P late last year -- comes at a time when both companies are investing heavily in major projects.
