Earlier last week S&P issued a similar downgrade on Chesapeake’s credit. In its report, Fitch said:
The downgrade reflects the company’s aggressive spending amid a period of expected weak natural gas price realizations and concerns relating to constrained liquidity longer term given the planned spending.
Fitch’s concerns are focused on the Chesapeake’s liquidity, which the ratings firm points out depends on Chesapeake’s ability to shed assets. S&P took a somewhat broader view, citing “revelations that underscore shortcomings in Chesapeake’s corporate governance practices, [and] covenant concerns” as well. However one looks at it, Chesapeake’s salad days are behind it.
The report from Fitch Ratings is available here.
Chesapeake’s closed up 6% on Friday, at $14.36 in a 52-week range of $13.32-$35.75.
Paul Ausick
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