July 25, 2012 / 12:06 PM / 5 years ago

TEXT-Fitch:U.S. oil & gas sector leads earnings as Hess Corp. CDS spreads widen

(The following statement was released by the rating agency)

July 25 - Amid another busy earnings week U.S. oil and gas companies are among those announcing results with CDS spreads widening considerably for one major sector company, according to Fitch Solutions.

CDS spreads on Hess Corporation, reporting today, widened 58% over the past quarter, notably underperforming the 13% widening observed for the broader North American oil & gas industry. A wider CDS trading pattern resulted in a one notch drop in Hess' CDS implied rating to 'BBB-'. CDS liquidity for Hess increased, moving up three notches to trade in the third regional percentile. Increased CDS activity along with wider spreads signals heightened market concern over the company's credit outlook.

Elsewhere, Caterpillar Inc. will also report second quarter earnings today. Despite firming 14% over the past month, credit protection on Caterpillar's debt is pricing 18% wide of levels seen a quarter ago. CDS liquidity for the industrials giant has increased as well, up four rankings to trade in the first regional percentile, indicating increased market uncertainty over future pricing levels.

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