A Pessimistic Read On Junk Bonds

Looming problems:

The pile of toxic corporate bonds in the US, euphemistically called “distressed” debt, ballooned 15% in the single month of February to $327.8 billion, up 265% from a year ago, according to S&P Capital IQ. The number of S&P rated US companies with distressed debt rose 9% in February to 353, up 128% from a year ago.

The last time the pile of distressed debt had soared to this level was in November 2008, and the last time the number of distressed issuers had shot up to these levels was in October 2008; Lehman had declared bankruptcy in September.

...These are some of the companies with the most distressed debt, in the top five sectors:

Oil-and-gas: Chesapeake with $6.4 billion in distressed debt; Linn Energy with $6.9 billion, and Continental Resources with $4.1 billion.

Mining and Metals: the three entities of Freeport-McMoRan with a total of $15.8 billion; Peabody Energy, $4.8 billion; Cliffs Natural Resources, $2.9 billion.

Telecom: the three Sprint entities with a total of $20.8 billion; Frontier, $5.5 billion.

Utilities: NRG Energy, $4.4 billion; Targa Resources $3.7 billion; Talen Energy Supply, $2.6 billion.

Media and Entertainment: iHeartCommunications, $8.7 billion; the two entities of Scientific Games with a total of $3.2 billion; Clear Channel Worldwide with $2.2 billion.