Select bondholders for several US independent producers agreed to take a haircut on the value of their debt in recent weeks, swapping out long-term debt for equity or secured debt that is worth less than the original principal. The exchanges were announced by SandRidge Energy, Midstates Petroleum, Halcon Resources and Warren Resources after months of prolonged weakness in oil and gas prices cut into cash flows. In light of these "distressed" exchanges, some major credit ratings agencies have downgraded the corporate credit ratings for the four independents to "selective default" (SD), just one notch above the lowest possible rating of default.
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