Morning Commentary: Chesapeake Energy plunges; company says it has no plans to pursue bankruptcy

By Rebecca Melvin

New York, Feb. 8 – Chesapeake Energy Corp. was the focus of attention in the convertibles space early Monday after a report that the Oklahoma City-based natural gas producer hired law firm Kirkland and Ellis, which the market interpreted as evidence that a bankruptcy filing was imminent.

The report caused Chesapeake stocks and bonds to plunge early Monday, but the company followed up with a statement saying that it has no current plans to pursue bankruptcy, and the securities were recovering, a New York-based trader said.

Chesapeake’s 2.5% convertibles traded down to 28.5 in the early going, which was down from 44 previously, a second New York-based trader said.

The Chesapeake 2.25% convertibles traded at 16, which was down 8 points.

The near-term straight bond, which matures March 15, 2016, fell to 75 from 95 on Friday. And shares dropped $1.07, or 35%, to $1.99.

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