In this follow up to my screencast-presentation titled, "5 Bonds Betting on Bankruptcy" - a visual note in which I walked investors of Ultra Petroleum (UPL), Halcon Resources (NYSE:HK), Stone Energy (NYSE:SGY), Vanguard Resources (NYSE:VNR), and Rex Energy (NASDAQ:REXX) through a variety of cap structure bond pricings and made commentary as to what indications these might have for long-term viability - I break out bonds of EXCO Resources (NYSE:XCO). Fortunately for EXCO investors, both common stock investors and investors with capital exposure to the two debt vehicles broken out within this visual note (I break out both the 7.50% NT REDCONV 15/09/2018 USD 2000 and the 8.50% NT REDCONV 15/04/2022 USD 2000 issues), this screencast will detail more positive findings. EXCO bonds - again, both detailed within the visual note - have been on a tear as of late.
Even better for EXCO investors, this upward revision in pricing preceded well-publicized runs in broader commodity pricing as well as subsequent "short squeezes" caused by the upward move in pricing. In my view and in the view of our firm, this is indicative of sentiment changes regarding the long-term sustainability of the business at EXCO. We also believe this could be indicative of sentiment changes regarding the lengths that the "Dream Team" of managers and large investors involved in the EXCO story would be willing to go in a longer, drawn out commodity crisis. Finally, we believe this could be indicative of a final round of financial engineering to come - to which we'll abbreviate our commentary and reserve for more appropriate forums.
To be clear, I keep things very "high level" within this screencast and nothing within this screencast is entirely inclusive of all relevant information; out of respect for those viewing this screencast both are being done to keep this visual note at a reasonably viewable length. As a bonus, I point viewers to where they can find data on 1) EXCO's 12-month default probabilities, as well as 2) historic 12-month default probability data for the E&P.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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