Posted on 12/11/2015 5:08:09 AM PST by thackney
A prolonged slump in commodity prices is rattling the market for junk-rated energy debt, but few firms have been hit harder than Chesapeake Energy Corp.
Half of the 10 worst-performing junk bonds over the past week were issued by Chesapeake, the Oklahoma City company that is the second-largest U.S. natural gas producer behind Exxon Mobil Corp. The company, a former Wall Street darling once headed by investor Aubrey McClendon, has sold billions of dollars in debt to help finance oil and gas purchases in recent years.
A few years ago, with oil prices near $100, Chesapeake was a favorite among debt investors because the sheer volume of the company's issuance made its bonds relatively easy to buy and sell without significantly moving the market price. Its share price briefly exceeded $60 during the energy-price spike of mid-2008.
But lately there have been many more investors seeking to sell the company's shares and bonds than to buy them, forcing down prices and intensifying fears among analysts and traders that the worst could yet be ahead. Its shares fetch less than $5 and many of its bonds between 30 and 40 cents on the dollar, down from close to 80 cents just three months ago.
The sharp decline in oil and gas prices this week has renewed concerns among investors that Chesapeake, and other U.S. energy producers, will be unable to repay bondholders if commodity prices don't recover soon.
It isn't an unusual predicament in the energy bust. Bonds from other low-rated producers have fallen, too: Through Wednesday, Oasis Petroleum Inc. bonds are down 9.1 cents over the past week to about 78 cents on the dollar, and bonds from EP Energy LLC are down 10.5 cents to 67, according to data from MarketAxess Holdings Inc. A bond from California Resources Corp...
(Excerpt) Read more at wsj.com ...
Interesting news. Expected, I guess.
What does one expect from a company who is a living, breathing ponzi scheme run into the ground by a promoter?
BTTT
Piss poor company.
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