KeNo's Housing and Economic Portal: Tuesday September 29 Housing and Economic stories

Monday, September 28, 2015

Tuesday September 29 Housing and Economic stories

KKR’s Samson Resources Files Bankruptcy as Shale Bet Sours – (www.bloomberg.com) Oil and gas driller Samson Resources Corp. filed for bankruptcy in Delaware Wednesday night, undone by a collapse in energy prices and billions in debt that KKR & Co. and other investors piled on to fund a 2011 takeover. Tulsa, Oklahoma-based Samson and its owners were stung by the price drop that put money into the pockets of consumers through lower gasoline and heating costs, while driving other producers, such as Sabine Oil & Gas Corp. and Quicksilver Resources Inc., into Chapter 11. Samson’s filing is among the biggest energy bankruptcies in the U.S. this year, but it probably won’t be the last. The shale-oil driller is, in a way, a victim of its own success. Samson and other producers have rushed to use hydraulic fracturing and horizontal drilling to tap previously hard-to-reach oil and gas deposits in shale formations, triggering a production boom that helped send prices tumbling.

Watch for Junk-Bond Air Pockets as Sprint Spirals Downward - (www.bloomberg.com) Sprint Corp. is a cautionary tale for investors who think they’re immune to carnage in the $1.3 trillion junk-bond market as long as they steer clear of energy debt. Moody’s Investors Service on Tuesday downgraded the wireless company, which has more than $30 billion of debt outstanding, as it struggles to compete with better capitalized competitors such as AT&T Inc. and T-Mobile USA. Much of the company’s debt was downgraded several steps to Caa1, which is considered close to default. The market response was fierce. Sprint’s $2.5 billion of bonds maturing in 2028 plunged as low as 80.8 cents on the dollar from 88.4 cents on Monday. Its $4.2 billion of notes maturing in 2023 fell as low as 90.1 cents from 98.6 cents two days earlier. Many big high-yield bond-fund managers, including Pacific Investment Management Co., Franklin Advisors Inc. and BlackRock Inc., hold Sprint debt. It’s one of the most frequently traded names in the junk-bond universe. The company’s challenges are no surprise, of course. It’s why it has a speculative-grade rating in the first place.

China takes aim at automated trading in commodities futures - (www.cnbc.com) China is extending its control of onshore markets to commodities exchanges, spooked by signs that speculators have shifted from China's volatile stock markets to commodities futures. The country's top commodities exchanges - the Dalian Commodity Exchange (DCE), Shanghai Futures Exchange (SHFE) and Zhengzhou Commodity Exchange (ZCE) - were asked recently by China's exchange regulator to draft rules designed to "regulate the behavior of program trading" in futures markets, according to people familiar with the matter. The move comes on the back of a slew of new regulations aimed at curbing what Chinese authorities call "malicious" trading in stock futures, blamed in part for stoking the turmoil that saw stocks slide over 40 percent since June.

Abengoa Loans Said to Fail to Draw Buyers Even at 60% Discount - (www.bloomberg.com) Banks are struggling to sell Abengoa SA’s loans even at a 60 percent discount to face value, according to two people familiar with the matter. Lenders including Bank of America Corp. and Citigroup Inc. have sought to sell parts of the Spanish renewable energy company’s 1.4 billion-euro credit facility since the beginning of August, said the people, who asked not to be identified because they’re not authorized to speak about it. A portion of the facility offered at 40 cents on the euro failed to sell at an auction last week, they said. Abengoa plans a 650 million-euro ($735 million) capital increase and to dispose of 500 million euros of assets after reporting that free cash flow would be lower than previously forecast. Moody’s Investors Service said the risk of a rating downgrade has increased because Abengoa hasn’t yet achieved its capital increase, according to a report on Wednesday.

Fixed Income Bloodbath: Jefferies Reports Negative Revenue On Junk Bond Prop-Trading Fiasco - (www.zerohedge.com) Earlier today, Jefferies which is now a part of Leucadia, provided this much anticipated glimpse into how the rest of Wall Street is doing. The answer, if Jefferies is any indication, is "quote horribly" because just like two of the past four quarters, Q3 was also a disaster and indicative of nothing short of a trading bloodbath on Wall Street in the past three months of trading and especially August. In fact, it was so bad for Jefferies, it reported a massive 31% plunge in total revenues down to $579 million resulting in net income of a tiny $2.5 million as a result of what may be only its first negative fixed income revenue print since the financial crisis.

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