NEW YORK--(BUSINESS WIRE)--Recently announced acquisitions may be leading to some credit default swap (CDS) market volatility for Devon Energy Corporation, according to Fitch Solutions in its latest CDS case study snapshot.
Five-year CDS on Devon Energy widened out 42% over the past week and 158% since the start of the year and are now to pricing at their widest ever levels. After pricing consistently at 'BBB/BBB-' levels for much of the past year, credit protection on Devon's debt is now pricing in below investment grade territory in line with 'BB-' levels.
'The likely driver behind Devon's CDS widening of late is the recently announced Anadarko/STACK and Powder River Basin acquisitions, which appear to be making market participants nervous as they are not partial to deals that add debt,' said Director Diana Allmendinger.
Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.
Fitch Group is a global leader in financial information services with operations in more than 30 countries. Fitch Group is comprised of: Fitch Ratings, a global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; BMI Research, an independent provider of country risk and industry analysis specializing in emerging and frontier markets; and Fitch Learning, a preeminent training and professional development firm. With dual headquarters in London and New York, Fitch Group is majority owned by Hearst.