Fitch downgrades BP to BBB from AA

Ratings agency Fitch has downgraded oil giant BP for the second time this month to just above junk status, with the news getting worse for the beleaguered company.

According to Fitch, the action comes in response to increasing estimates of spilled oil in the Gulf of Mexico and amid increasing pressure on the company to establish an escrow account for payment of damages. The company's rating stands downgraded to BBB from AA on Tuesday.

This action follows two weeks after Fitch downgraded BP to AA from AA-plus and put the company on "watch negative."

According to the agency said there were two main reasons behind the latest downgrade.

The first reason, according to Fitch, is last week's US government scientists revising estimates to significantly higher levels than assessed earlier which could result in substantially increasing BP's exposure to Justice Department fines.

The second reason Fitch cited was the significant step-up in action from the US government in response to calls for pre-emptive escrowing of damage claims.