The cost of protecting Chesapeake Energy Corp.’s debt from losses plunged after the company announced yesterday that Chief Executive Officer Aubrey McClendon would retire.
Five-year credit-default swaps on the Oklahoma City-based company’s debt dropped 72.5 basis points to 391.9 basis points as of 7:30 a.m. in New York, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
Default swaps, which typically fall as investor confidence improves and rise as it deteriorates, pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
McClendon will retire on April 1 from the company he co-founded and will serve as CEO until his successor is appointed, the company said yesterday in a statement.