BP oil spill “frightening reminder” of tail risk, say analysts

BP's Deepwater Horizon oil rig collapsed on April 22

The oil spill in the Gulf of Mexico, triggered by the collapse of BP’s Deepwater Horizon oil rig on April 22, has highlighted the issue of tail risk for credit investors.

BP’s market value plummeted as the crisis escalated: between April 21 and June 16, the company’s share price sank 47.7%, from 650 pence per share to 340. The company was downgraded by the major rating agencies: including a six notch downgrade (from AA to BBB) from Fitch Ratings on June 15. Although the announcement, on June 16