The ratings agency downgraded Santos from a BBB+ score to BBB in December – accelerating the oil and gas producer’s share price spiral at the time.

Macquarie noted that its forecast of Santos’ funds from operations over net adjusted debt figure was substantially below 30% in 2016 and could potentially see S&P cut Santos’ rating to BBB-.

“However, with S&P yet to put the credit rating on negative watch (which would require management to take remedial action within a narrower 90 day window), it appears S&P is willing to look through to improving credits metrics in 2017, when we forecast FFO/ND to comfortably exceed 30%,” Macquarie said.

The broker also sees no need for Santos to raise equity to protect its BBB credit rating, especially given that Santos could “extend its maturities using its current undrawn capacity to 2018” to buy more time.

As for plans to auction GLNG’s circa $6 billion gas transmission pipeline, Macquarie said such a sale would support liquidity but not necessarily the credit rating.

“That said, while providing significant liquidity to Santos if successful (particularly given the carried forward tax losses), we struggle to see a scenario where such a sale would be materially accretive to credit metrics given S&P’s treatment of such a transaction,” the broker said.

It maintained an outperform rating on Santos’ stock although it flagged the potential for more oil price-related pain.

“Assuming no further cuts to S&P assumptions and a smooth commissioning of GLNG we believe the initiatives put in place by management sees the BBB credit rating preserved,” Macquarie said.

“Nonetheless, with gearing anticipated to remain more than 40% until 2017, this could prove uncomfortably high against the backdrop of uncertain oil prices, which could potentially see the discount persist.”