Wednesday, July 22, 2015

More Leveraged Commodity Producers On The Ropes

Energy XXI (EXXI) - Gulf of Mexico oil & gas producer

  • The 3% note due December 2018 traded at 13 cents today. That's a current yield of 23% and a yield to maturity of 82%!
  • The yield curve for EXXI unsecured debt is inverted - the 2017 note yields 60% to maturity, the 2019 note yields 50% to maturity. (These both have current yields in the low 20% range.) An inverted yield curve happens when bond investors start trading the paper based on recovery value and number of coupons before default.
Peabody Energy (BTU) - thermal coal producer
  • The 4.75% subordinated note traded at 12 cents. That's a current yield of 40%! (Yield to maturity is not much higher because this one doesn't mature for a long time.)

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