Blog

Our Experts Comment the Times Series

See All the Comments
rss

Will We See Many?

13 April 2016 by lberuti

With the fall of energy prices, the sector has long been highlighted as the most fertile ground for potential defaults. Some companies already filed for bankruptcy in the recent past in the coal industry (Arch Coal Inc and Alpha Natural Resources) but none were included in the most recent series of CDXHY. Today, BTU (Peabody Energy Corp) joined its rivals and decided to ask for creditor protection. If you look at the above Grapple, which shows that BTU‘s 1 year default probably has been consistently above 80% for the last couple of months, it should not come as a surprise to investors. The name is included in series 24 and 25 of CDXHY in the US, and it will be the first default reported in 2016 in the credit indices universe. VRX (Valeant) received overnight a notice of default from bondholders due to their delayed 10-K-filing. It only triggers if VRX cannot comply by the end of May though, and one of the many distressed US Oil Companies could be the next casualty. In Europe, PORTEL (Portugal Telecom) or NSINO ( Norske Skogindustrier ) could default or restructure their debt sooner rather than later. It looks as if the market should brace itself for more triggered CDS over the next few months.