One Oil Driller Set To Default - Mike Swanson (03/05/2015)
Do not be fooled by the bottom callers.
Oil drilling fracking companies are in deep trouble and today Bloomberg reports that one of them is on the verge of default:
Less than seven months after raising $175 million in a junk-bond offering, American Eagle Energy Corp. said Monday that it wouldn’t make its first interest payment on the debt. Instead, it hired two advisers -- Canaccord Genuity Group Inc. and Seaport Global Holdings LLC -- to negotiate with bondholders on a plan to restructure its debt, according to three people with knowledge of the situation who asked not to be named because the matter is private. The holders of the notes are left to consider how to maximize recovery of their investment, either by giving the company more time to try to become profitable or by pushing it into default.
With the price of U.S. crude down 52 percent since July, American Eagle and other small energy producers with significant debt loads are struggling to service obligations to creditors who were willing to lend them money just a few months ago. The energy sector represents about 14 percent of the high-yield bond market, and analysts expect defaults to increase this year....
For full story go here.
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