NEW YORK (CNNMoney.com) -- Moody's Investors Service cut BP's long-term rating by three notches Friday, marking the second downgrade in a month, citing the worsening impact of the oil disaster.
Moody's cut BP's senior unsecured ratings and long-term debt securities to A2 from Aa2 and said there could be further downgrades as it continues to review BP's ratings.
"Moody's update assessment is that the spill will have a sustained negative impact on the group's free cash flow generation and overall financial profile for a number of years," said the rating agency in a statement.
Also on Friday, Moody's downgraded the senior unsecured issuer rating of BP Finance by three notches to A3 from Aa3 and the senior unsecured issuer rating of BP Corporation North America by four notches to Baa1 from Aa3.
The rating agency had downgraded BP once before, on June 3. On that same day, Fitch Ratings also announced a downgrade of the oil giant. Since then, Fitch announced a second downgrade to just above junk status.
Moody's referred to the BP's agreement to set up a $20 billion escrow to cover damages and liabilities related to the spill as a "mildly positive development."
"Establishing a clear funding mechanism to make payments to injured parties may moderate pressure for the government to pursue more punitive actions," said Moody's.
BP (BP) owns 65% of the well that is spilling up to 60,000 barrels per day in the Gulf, according to government estimates. The problem has been ongoing since April 20, when the Deepwater Horizon offshore rig, which is owned by Transocean (RIG) and leased by BP, exploded and sank, killing 11 workers.
Since then, BP has been unable to plug the leak. The company's chief executive, Tony Hayward, was subjected to blistering Congressional testimony on Capitol Hill Thursday, where he was accused of "stonewalling."
BP's stock has plunged 47% since the accident by Thursday's close. The company was not immediately available for comment. Under pressure from the government, BP has canceled its dividend for the rest of the year.
The company was not immediately available for comment. 
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