Fitch eyes Southwestern Energy positively

Fitch Ratings said it placed Southwestern Energy Co.'s BB+ long-term issuer default rating and all issue ratings on rating watch positive following the announced acquisition by Chesapeake Energy Corp.

“The rating watch positive reflects the reasonable valuation of the all-equity transaction, the conservative pro forma capital structure and the increased scale of the combined company, which will be the largest North American natural gas producer and third largest public producer globally. The scale and metrics of the combined entity will be commensurate with investment-grade ratings,” Fitch said in a press release.

The agency estimates that “the combined entity to maintain a sub 1.5x EBITDA leverage after closing, as well as strong liquidity and a back-end maturity profile.”

Fitch noted it may take longer than six months to resolve the RWP.

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