Shares of Chesapeake Energy Corp. CHK rallied 1.6% toward a six-week high in morning trading Thursday, after Fitch Ratings raised the natural gas and oil company’s credit rating to the highest “junk” rating, and indicated the next rating move will make it investment grade. Fitch upgraded the longer-term issuer default rating (IDR) to BB+ from BB, and said the rating outlook is positive, which implies the next move could be an upgrade. Another upgrade would take the rating to BBB-, which is the lowest investment-grade rating. “The Positive Outlook could be resolved in up to 24 months as Chesapeake continues to develop a track record in line with its post-bankruptcy emergence conservative financial policy,” Fitch said. In comparison, S&P Global Ratings rates Chesapeake’s credit at BB, two notches below investment grade, with a “stable” outlook, while Moody’s rates the credit at Ba2, also two notches below investment grade, but with a positive outlook. Chesapeake’s stock has shed 14.9% year to date, while the Energy Select Sector SPDR exchange-traded fund XLE has eased 0.6% and the S&P 500 SPX has gained 7.3%.
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