Chesapeake's debt rating cut

Chesapeake Energy Corp.’s stock tumbled in morning trading Tuesday after credit ratings agency S&P cut the company’s debt rating.

S&P lowered its rating on Chesapeake’s senior unsecured notes to BB-, three notches below investment grade.

The downgrade reflects mounting turmoil stemming from revelations that underscore shortcomings in Chesapeake’s corporate governance practices, covenant concerns, and the likelihood Chesapeake will face an even wider gap between its operating cash flow and planned capital expenditures than we had previously anticipated,” S&P stated in its report.

S&P said the ongoing turmoil at Chesapeake “could hamper Chesapeake’s ability to meet the massive external funding requirements stemming from its currently weak operating cash flow and aggressive ongoing capital spending.”

Also on Tuesday, Chesapeake increased the unsecured loan it announced Friday to $4 billion, up from $3 billion, according to Reuters. Chesapeake has not commented on whether the loan amount has changed.

Chesapeake said Monday that the loan from Goldman Sachs and Jefferies Group would give the company a strong position as it works to sell $9.5 billion to $11 billion in assets by the end of the year.

Chesapeake’s stock dropped nearly 6 percent, or 93 cents, as of 10 a.m. to $14.59 a share.