Following Noble Group’s downgrade to junk and “Enron moment,” we thought it worth considering who is next to be junked?
Judging by the market’s expectations, there are now 110 credits that are rated “investment grade” but trade like junk, and as Markit’s Neil Mehta notes, this is up from just 21 in November.
There are 18 US Energy names (and 23 globally) that are currently traded at CDS levels implying junk status, with Diamond Offshore, Nabors, and Encana top of the list.
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And finally, away from the energy complex, we note that Freeport McMoran is at the top of the list of likely junk downgrades and today’s carnage has extended Carl Icahn’s losses…
as it seems FCX stockholders are getting the joke…
(1739bps; Av BBB; Imp CCC)
The US copper and gold producer has seen its 5-yr CDS spread trading at implied junk levels for the last six months. Troubles have intensified over the past month and credit spreads now imply a 79% chance of default within the next five years. Moody’s placed the $6bn company on review for a possible downgrade just last week.