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Chesapeake Bonds Increase Most in Seven Months on Asset Sales

Sept. 12 (Bloomberg) -- Bonds of Chesapeake Energy Corp. climbed the most in seven months after the energy producer agreed to sell portions of oil and natural-gas fields and other assets to narrow a cash-flow shortfall.

Chesapeake’s $1.3 billion of 9.5 percent debt due February 2015 rose 2.25 cents to 113.25 cents on the dollar to yield 3.7 percent as of 9:18 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That’s the biggest increase since February and the highest price since April, when the securities traded as high as 114.6 cents, Trace data show.

The company, based in Oklahoma City, agreed to sell portions of fields in the Permian Basin of Texas and New Mexico and other assets in a series of transactions for $6.9 billion.

Chesapeake, the second-largest U.S. natural-gas producer, lost as much as 60 percent of its market value in the past year as a glut-driven slump in gas prices squeezed the company’s cash flow and forced Chief Executive Officer Aubrey McClendon to accelerate the pace of asset sales. Investors also battered the stock amid two federal probes of potential conflicts between the CEO’s personal financial transactions and corporate duties.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net;

To contact the editor responsible for this story Alan Goldstein at agoldstein5@bloomberg.net;

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