Moody's cuts Marathon debt

Moody's Investors Service said it downgraded the long-term debt ratings of Marathon Oil Corp. to Baa2 from Baa1 and Marathon Petroleum Corp. to Baa2 from Baa1, concluding a review for downgrade in conjunction with Marathon Oil's spin-off of Marathon Petroleum to shareholders.

The outlook is stable.

The spin-off was approved by Marathon's board of directors on May 25 and is expected to take place on June 30, the agency said.

Moody's also confirmed Marathon Oil's Prime-2 commercial paper rating and assigned a Prime-2 rating to Marathon Petroleum's newly launched $2 billion commercial paper program.

Marathon Oil's Baa2 rating reflects the asset scale, reserves and production diversification and financial profile consistent with other Baa-rated independent E&P companies, the agency said.

Marathon Petroleum's Baa2 rating reflects the downstream company's strong regional position and solid capitalization, which should enable it to withstand swings in the refining cycle and maintain financial metrics appropriate for its rating, the agency added.

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