Chesapeake Energy's (NYSE:CHK) credit rating is downgraded to B from BB- at S&P with a negative outlook, as the ratings agency's business risk assessment for CHK is lowered to fair from satisfactory.

S&P also cuts CHK's senior unsecured debt rating to CCC+ from BB-, CHK's senior secured debt to BB- from BB+, and CHK's preferred stock to CCC from B-.

S&P expects natural gas and crude oil prices to remain under pressure from excess production capacity, and sees CHK's profitability suffering from the high costs associated with its gathering and processing agreements.

While CHK's outstanding debt should fall by ~$1.5B based on preliminary results of the recent exchange offer, S&P says the tendered offer failed to significantly ease the upcoming need to address $2.5B of debt maturities or puts through 2017.