Energy defaults to exceed 2016 peak, Morgan Stanley says

Mar. 09, 2020 3:16 PM ETChesapeake Energy Corporation (CHK), CHRD, AR, RRC, OXY, CLR, CTRA, CVX, MRO, HESCHK, CHRD, AR, RRC, OXY, APA, CLR, CTRA, CVX, MRO, HESBy: Carl Surran, SA News Editor68 Comments
  • Plunging oil prices will expose a "significant portion" of the $348B of investment grade index-eligible debt that is BBB rated to downgrade and aggravate strains in the broader U.S. credit market, Morgan Stanley says.
  • "Unlike 2016, the risks are not limited to the high-yield market alone," Morgan Stanley says, adding that it expects energy defaults to surpass the 2016 peak.
  • The firm says Chesapeake Energy (CHK -27.4%) and Whiting Petroleum (WLL -39.1%) are at the greatest level of default risk over the near term - less than a year - while Antero Resources (AR -14.9%), Oasis Petroleum (OAS -60.1%) and Range Resources (RRC -6.3%) are at the most risk over the intermediate term - 1-2 years.
  • Stanley says fallen angel risk rising at Occidental (OXY -44%), Apache (APA -46.9%), Continental Resources (CLR -48.9%), Cimarex Energy (XEC -35.4%), Noble Energy (NBL -25.8%), Marathon Oil (MRO -46.9%) and Hess (HES -35.9%).

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