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S&P might up Chesapeake Energy unsecured debt
S&P said it placed the CCC+ issue-level ratings on Chesapeake Energy Corp.'s unsecured debt on CreditWatch with positive implications.
The B issuer credit rating, BB- senior secured ratings and CCC preferred stock ratings are unaffected.
The outlook is stable.
The CreditWatch placement follows the announcement that Chesapeake plans to sell its Utica Basin assets to Encino Acquisition Partners for $1.9 billion, with proceeds used to repay debt, S&P said.
“Depending on the amount and type of debt repaid, we could raise the issue-level ratings on Chesapeake's senior unsecured debt one notch to B-,” the agency said in a news release.
“The asset sale will provide significant cash for debt repayment, improve profitability and lower interest expense. We expect financial measures to improve following the close of the transaction but remain consistent with our expectations for the current rating, including funds from operations (FFO) to debt between 12% and 20%.”
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