Investors Giving Up on Chesapeake Energy?

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From Bloomberg:
Credit investors who lent $11 billion to Chesapeake Energy Corp. are starting to give up on the company, the second-biggest junk-debt issuer in the U.S. energy industry. 
Nearly all of the energy producer’s bonds plummeted to their lowest levels ever on Thursday as oil dropped toward a more-than six-year low. Chesapeake notes were the second-most actively traded in the high-yield market, just behind Petrobras Global Finance BV.


 
One of Chesapeake’s bonds dropped 9 cents on the dollar, while the price of credit-default swaps -- used by investors to protect against defaults -- rose to the highest ever. The company’s shares sank to a 13-year low.

"We are seeing investors capitulate to the reality of the situation," said John McClain, a money manager at Diamond Hill Capital Management Inc. in Columbus, Ohio, which oversees $16 billion. "They have a lot of debt, they are burning through cash and their earnings profile is not getting any better. They are trading worse than their credit rating suggests, and there is almost certainly a downgrade coming."
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