Chesapeake Energy bonds gyrate as bankruptcy rumors abound; Halcon notes taken for a ride

By Stephanie N. Rotondo

Seattle, Feb. 8 – Distressed debt investors were focused on Chesapeake Energy Corp. on Monday as rumors the company was looking to file for bankruptcy pervaded the market.

At first, the bonds reacted quite negatively to the chatter. Once the company issued a statement dismissing the rumors, there was some bounce back, though the paper still ended weaker for the day.

Another notable name was Halcon Resources Corp., which said in a press release on Monday that it continued to “proactively explore multiple options” to strengthen its balance sheet.

The company noted that it had already reduced its debt load by about $1 billion in 2015.

Traders, however, gave mixed reviews on how those bonds performed, with one deeming the debt down outright and another seeing the paper firming. The second trader said the paper had dropped Friday, “probably on rumors they hired advisers to explore bankruptcy.”

“I guess there is going to be a lot of exploring [of options] in the E&P [sector],” a trader commented.

Not helping matters was the fact that the broader markets spiraled downward. Domestic crude oil prices declined 2.56% on the day, ending just north of $30 a barrel. Supply glut concerns were driving the commodity downward, especially as talks between Saudi Arabia and Venezuela over the weekend failed to provide any solid deal for cutting production among OPEC and non-OPEC members.

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