Moody's says oil sector suppliers face ratings risk from investment cuts

LONDON, Jan 26 (Reuters) - Steep cuts in oil and gas investment spending by the likes of BHP Billiton (NYSE: BBL - news) will weigh on the ratings of goods and services suppliers including Weir Group, ABB (NYSE: ABB - news) and Smiths, credit agency Moody's said on Monday.

On Wednesday, global mining and energy company BHP said it would slash spending on shale drilling over the next six months in response to sharp drops in oil and other commodity prices.

Moody's estimated this will reduce the company's investment in the sector by around 35-40 percent in the second half of 2015, with further downside risk in 2016 if prices remain weak.

"Declining oil and gas investment spending, particularly if it becomes more widespread... would be credit negative for several European manufacturing companies that supply capital goods to the oil and gas industry," the rating agency said.

The most exposed companies are valve, pump and seal firm The Weir Group, Smiths Group (Other OTC: SMGKF - news) , Metso Corporation (Other OTC: MXCYY - news) , ABB and Siemens (BSE: SIEMENS4.BO - news) , it said.

Suppliers to the natural resources sector have come under increasing pressure in the last couple of years as falling commodity prices push mining and energy companies to cut or delay new projects, reducing demand for services and equipment. (Reporting by Silvia Antonioli; editing by John Stonestreet)