Thursday, November 19, 2015

Chesapeake Is Trading Like A Bankruptcy (CHK)

But it probably won't have to file.
First up, with the stock down 10% (to $5.40) on the day here is the recent action via FinViz:

CHK Chesapeake Energy Corporation daily Stock Chart
And from Bloomberg: 

Chesapeake Energy Bonds Plunge to the Lowest Ever as Oil Falls
Debt of Chesapeake Energy Corp. tumbled to a record low on Thursday as the price of oil plunged.
Nine of the energy producer’s unsecured notes plummeted, some losing more than 12 cents on the dollar, as it was the most actively traded company in the junk-debt market. Credit-default swaps, which are used by investors to protect against defaults, rose to the highest ever.
The company’s $1.1 billion of unsecured notes due 2017 dropped 12.2 cents to 70.75 cents on the dollar at 11:48 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. One of its biggest bonds, the $1.5 billion of floating-rate notes due 2019, fell 7.4 cents to 43.6 cents at 11:48 a.m. in New York, the data show.

Five-year CDS contracts rose 5.5 percentage points to 53.5 percent upfront, according to S&P Capital IQ. Swaps are used to protect investors against losses on company debt, and the price increases along with doubt about a firm’s creditworthiness...MORE
The reason for the bankruptcy comment? CHK's market cap, at $3.6 billion is less than a fifth of 11% holder Carl Icahn's net worth. They'll figure something out.