E&P Debt Recoveries Hit ‘Catastrophic’ Level, Moody’s Says
- Creditors get 21% in bankruptcy claims, less than half norm
- Distressed bond exchanges usually fail to avert Chapter 11
This article is for subscribers only.
Creditors of energy exploration and production companies that went bankrupt last year recouped less than half the usual amount for their claims, and 2016 is shaping up just as bad, according to Moody’s Investors Service.
Recovery rates for 15 U.S. E&P bankruptcies averaged a “catastrophic” 21 percent last year, well below the historical average of 59 percent, Moody’s said in a report released Monday. Senior unsecured bondholders were hammered even more, averaging just 6 cents on the dollar. Collectively, the debacle could be worse than the telecom industry’s collapse in the early 2000s, measured by both the number of companies that go bust and the recoveries, Moody’s said.