Junk still the story of 2016
Markets are rightfully focused on the Federal Reserve today but the major theme of 2016 remains the commodity market.
The focus has shifted away from stresses in resource prices because of the recent bounces but the bigger picture pain is highlighted today by Peabody Energy, a coal company that employs 8,000 people.
It's market cap exceeded $20 billion not long ago but in a filing today it warned it could be headed for bankruptcy as it failed to make a bondholder payment yesterday and is ticking down on the 30-day grace period.
Shares of the company had bounced 200% earlier this month but are now skidding along the lows.
I don't know why the shares aren't below $0.50 because there is no way this company can refinance itself. They have total debt of $6-7 billion.
Stories like this aren't going to go away, especially if oil falls back into the $20s. Zerohedge has a great list of energy bonds that are likely to default in the near term.
Fitch says $63 billion in commodity-company bonds are trading at 40-cents or lower.