The fallout surrounding Chesapeake Energy Corp. CEO Aubrey McClendon’s personal loans on company drilling projects could hurt Chesapeake”s bond rating, according to a report by Bloomberg on Friday.
McClendon in February said the company is on pace to becoming investment grade by the end of the year. But credit-default swaps on the bond market this week indicate that Chesapeake’s lenders have less confidence that the company will repay its debt. Chesapeake had $10.6 billion in long-term debt as of the end of 2011.
Marc Gross, a money manager at RS Investments in New York, said the news this week has “severely tainted the company.”
There is no chance of an IG (investment grade) rating” over the next three years, he said. Chesapeake is “more likely to get downgraded than upgraded.”