S&P said its decision to downgrade the miner followed a "recent update to our price assumptions for most commodities, including key elements of BHP Billiton's portfolio such as iron ore, copper, and coking coal".
The ratings service said metal prices have come under pressure because of fears of lower demand from China, with excess supply still an issue for the market.
Moreover, S&P added, particularly relevant for the Anglo-Australian firm is "the oversupply of crude oil in the market results in very weak oil and Henry Hub gas prices, which we now believe will last over the foreseeable future, putting further pressure on its balance sheet".
S&P has forecast a "material drop" in BHP Billiton's results over the next 18 months.
In response to the downgrade, the miner said: "BHP Billiton has the strongest credit rating in the sector and remains committed to maintaining its strong balance sheet through the cycle."
Last month, BHP Billiton said it would take an additional $300m (£211.6m) to $450m in impairment charges from its first-half earnings, due to redundancies and inventory write-downs as well as royalty and taxation matters.
This followed the company's announcement that it would be hit by a $4.9bn post-tax (or $7.2bn pre-tax) impairment charge for the last financial period, as a direct impact of the falling price of oil and gas.
S&P commented: "Previously, we considered that the oil division set the company apart from other miners, supporting more stable profitability and cash flows over the cycle. However, this edge could be dulled if oil prices remain at current levels (around $30 per barrel), resulting in a negative contribution to BHP Billiton's cash flows."
Shares in BHP Billiton closed up 0.25 per cent today.