After Noble, Here Are The Next 18 US Energy Companies To Be Junked
Following Noble Group's downgrade to junk and "Enron moment," we thought it worth considering who is next to be junked?
Judging by the market's expectations, there are now 110 credits that are rated "investment grade" but trade like junk, and as Markit's Neil Mehta notes, this is up from just 21 in November.
There are 18 US Energy names (and 23 globally) that are currently traded at CDS levels implying junk status, with Diamond Offshore, Nabors, and Encana top of the list.
And finally, away from the energy complex, we note that Freeport McMoran is at the top of the list of likely junk downgrades and today's carnage has extended Carl Icahn's losses.
... as it seems FCX stockholders are getting the joke...
Freeport-McMoRan Inc
(1739bps; Av BBB; Imp CCC)
The US copper and gold producer has seen its 5-yr CDS spread trading at implied junk levels for the last six months. Troubles have intensified over the past month and credit spreads now imply a 79% chance of default within the next five years. Moody’s placed the $6bn company on review for a possible downgrade just last week.
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the meltdowns in do & fcx are almost unbelievable. they were invincible, the darlings of hedge funds and pension funds alike. heros to zeros in record time. clf & btu you could see coming from a mile away, but fcx? inconceivable.
Tell me about it bro. My ass still hurts from my FCX humping. Of course it's my fault, I just didn't think it could happen so fucking quickly. Something to remember when the whole enchilada starts to unwind...
I keep thinking and saying that the coming decline will be long, and may not even be a decline nominally but I may need to reassess that logic. If all that debt blows up it is going to leave a smoking hole in a thousand balance sheets.
http://media.makeameme.org/created/well-that-escalated-jmg8n6.jpg
That's been my thesis. When it all unwinds it's going to happen so fast we won't know what the fuck hit us.
Its unwinding right now...piece by piece, bit by bit. Coming to a 6x levered up company near you!
Just think of how many "shocks" there have been in the past.
I wasn't around for the 70s gold trading, but from what I've read and heard, it was a highly volatile time. Then what's his name jacked up interest rates to 13% or something crazy?!
How about 87?
2000 was not very orderly at all if I do recall. I saw a great article on ZH comparing FB to AOL. AOL peak val is close to where FB is. AOL disappeared so fast.
Dumb question: when 'public' exchanges are halted for the day -- can private dark pools and other exchanges still trade. Meaning, retail is locked out for the day at 10% down while dark pools and institutions unload overnight and when it opens the next day it has already gapped down again to a halt...
That's been my thesis... sudden, violent and inescapable. Unless you're a big guy.
just remember that even dark pools need to have a buyer on the other side, so it's no panacea of exit-liquidity in a crash scenario.
PGH and ABX broke my heart.
However, not everything can or will fail. Most companies of any substance & size will survive this.
Now is the time to buy. Hear all the fear and panic? that's blood in the street.
Buy when there's blood in the street.
Well, just wait until FCX votes a 1:10 reverse split on the shares!
Icahn will make money....Huh? Say again. Oh, my bad. It doesn't work that way.
Nothing to see here; move along.
Didn't Georgie Soros take a stake in BTU around 1.00-1.20? Before the 1:15 reverse split.
Yesterday, BTU was trading at 36c pre-split.
Most of the commentators reported it as if he bought a couple million dollars worth, but the only one that made sense to me speculated that it was really him covering a short (which he could have put on at $60/share - so making around $60,000,000 or so)
Big oil is going to need another subsidy. Suck it up great grandchildren, you're about to get screwed by being stuck with the bill again.
When these hedge fund managers take a stake, you know it's over. Remember Soros's stake in Allied Nevada Gold?
So basically what you do to identify these opportunities is to look for the companies ripe for downgrade? Then I would assume you want to short their shares and/or buy their CDS. My main question here is, if these companies have implied ratings lower than their actual credit ratings, wouldn't the efficient market hypothesis dictate that there should be no measurable impact once the ratings agencies finally get around to a formal downgrade?
Just keep bumping up interest rates in the U.S. and see what happens next.
Lots of interesting names on that list I saw, Barrick Gold, Kohls', GlenCore, Freeport obviously, Macy's, Gap, Best Buy, Staples, Newmont. Damn. The list goes on as they say.
Who's next? ExxonMobil? No, but eventually...
MRO is looking pretty shaky right now.
Companies can trade insolvent and live for another day,the US laid off 90000 energy jobs last year,good paying jobs that kept many small places alive,who knows how many will be laid off this year
LOL Fox Business are saying the oil computer crashed surprise,surprise,surprise
It's the weather in China causing it...
An F-6 Financial tornado about to lay waste to the Tower of Babel...
Glencore, man.
here's my question.
how can noble go tits-up? if memory serves me correctly, noble energy is the company developing oil from the golan heights and gas from the offshore joo platform.
surely you jest.
Not surprised to see South Afrca on that list .. From riches to rags in 21 years. Shit, that must be a record right?
Where is that mo fucker Eirik ..?
Sweden's next, maybe even Germany. Fuck it, the whole planet's going tits up ..
Full steam ahead with globalization. Until the debts have been downsized that mean capital consumption having run its course, these flotillas in once bubbly seas have to consolidate or be forgotten debris. The 1% liquidity providers know where to shower blooms that may be decades ahead. Bottom of the food chain are the preys/retail investors who are drugged to the spins of the CEOs/Strategists who are busy angling for bail-outs, subsidies. etc for their skins (compensations). CDS are better indicators than asinine ratings given by analysts with eyeshades who cannot see deformed, rigged markets with ever collapsing price discoveries. Trade the downtrends but respect the money printers, its an opportunity for a lifetime. Use CDS to harvest the illiquidities escalating in the peripherals of EM Assets, etc.