Fitch rates Chesapeake notes BB

Fitch Ratings said it assigned a BB rating to Chesapeake Energy Corp.'s proposed senior note offering and affirmed its issuer default rating at BB, senior unsecured debt at BB, senior secured revolving credit facility and hedge facilities at BBB-, and convertible preferred stock at B+.

The outlook remains negative.

Short-term concerns focus primarily on liquidity issues following Chesapeake's full drawndown of its senior credit facility, the agency said.

Concerns also include the company's aggressive growth strategy, high leverage, significant use of off-balance sheet financings, potential for weaker production levels stemming from reduced capital expenditures and strategy to monetize producing properties and reinvest proceeds into leaseholds, Fitch said.

Ratings are supported by the size and low risk profile of its oil and gas reserves, the agency said. Other factors supporting Chesapeake's liquidity stem from the lack of near-term debt maturities.

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