Moody’s cuts Chesapeake Energy, Brazos Valley

Moody's Investors Service said it downgraded Chesapeake Energy Corp.’s corporate family rating to Caa1 from B2, its probability of default rating to Caa1-PD from B2-PD and its senior unsecured notes ratings to Caa2 from B3.

The agency also downgraded the CFR of Chesapeake’s wholly owned subsidiary Brazos Valley Longhorn, LLC to Caa1 from B2 and the senior unsecured notes rating of Brazos Valley’s predecessor entity, WildHorse Resource Development Corp. to Caa2 from B3.

The rating action comes after Moody’s finished the review for downgrade on Chesapeake and Brazos Valley that it started Nov. 7.

“The downgrades reflect the heightened potential for Chesapeake to undertake a distressed exchange or other restructuring activity in light of the company’s history of largescale purchases of its debt at distressed levels, the deep discount at which its debt is trading and statements the company’s management has made pointing to the possibility of ‘capital exchange transactions,’” said John Thieroff, a Moody’s senior analyst, in a press release.

The outlooks for Chesapeake and Brazos Valley are negative.

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