Fitch cuts Kerr-McGee to junk

Fitch Ratings said it downgraded and removed from Rating Watch Negative the ratings of Kerr-McGee, including its senior unsecured debt to B from BBB and commercial paper to B from F2.

Fitch also assigned a BB senior secured rating to Kerr McGee. The outlook is stable.

Kerr-McGee announced it intends to repurchase $4 billion of common stock, initially financed with a combination of bank debt.

Fitch said the plan substantially increases Kerr-McGee's leverage to $7.2 billion from $3.2 billion currently.

Kerr-McGee's action today is an abrupt change in the company's financial and operational strategy. As a result, Fitch said it questions Kerr-McGee's long-term strategy and future expectations regarding reserve bookings, production, capital expenditures and debt reduction.

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