As Chesapeake Energy Corp.s bonds continue to selloff, investors are becoming increasingly concerned that the oil and gas company could take measures that would leave them worse off.
Investors buying heavily covenanted loans with standard protections may be overlooking sleeper provisions that essentially morph them into cov-lite facilities over time, according to Moody's Investors Service.
Distressed debt exchanges are still very much in vogue, Moodys Investors Service said Tuesday.
If oil prices remain in a lower-for-longer scenario, high yield exploration and production companies may resort to selling off assets, Fitch Ratings said.
The speculative-grade corporate default climbed to 2.5% in the third quarter, and is now projected to escalate to four-year high of 3.8% in 2016 due to the ongoing oil and gas sector woes, Moodys Investors Service reported Monday.
The coal producer's plans to exchange certain debt issues are no more, it said Tuesday. It will, however, continue restructuring talks with lenders.
Not a single junk-rated issuer was considered for investment-grade status last quarter, Moodys Investors Service said Oct. 27.
The energy sectors leveraged loan default rate spiked to 5.2% in September, pushing the overall loan default rate to 1.4%.
Distressed energy companies are crowding the bottom ladders of the Moodys Investors Service ratings grid and it appears more will likely join them in the near future.
Pressure on corporate liquidity remained elevated through mid-October, but thus far has not worsened from Septembers precipitous rise in stress levels as measured by Moodys Investors Service.