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Fitch: Energy E&P junk bond default rate hit record in H1

Jul. 12, 2016 6:24 PM ETBattalion Oil Corporation (HK) StockWTI, KEG, BATLBy: Carl Surran, SA News Editor1 Comment
  • U.S. oil drillers failed to pay $28.8B owed to junk-bond investors this year, bringing the sector's debt default rate to a record level, according to a new report from Fitch Ratings.
  • H1 defaults among all high-yield issuers hit $50.2B, topping the $48.3B total defaults for all of 2015, and are on track to reach as high as $90B by year-end, Fitch says; the H1 default rate was a six-year high 4.9%, with an energy default rate of 15% and an E&P sector default rate of 29%.
  • The default rate among energy explorers could climb to 35% this year, says Eric Rosenthal, Fitch's senior director of leveraged finance, as more drillers such as Halcón Resources (NYSE:HK), which has $2.5B in outstanding bonds, are expected to file for Chapter 11 bankruptcy protection.
  • Fitch’s watch list for companies that potentially could fail to repay their debts includes Venezuela’s state-owned PDVSA, W&T Offshore (NYSE:WTI) and Key Energy Services (NYSE:KEG).

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