A COMMODITY DEBT ARMAGEDDON LOOMS

Two thousand and sixteen will not be a year of reckoning for basic resource stocks because there isn’t a lot of debt maturing over the next 12 months. However, as we make our way into 2016, people will start to look out towards the future and make judgement calls as to whether or not a company will be able to restructure the debt to stretch out looming maturities.

Here are some choice names and the amount of debt maturing within the next 3 years.

FCX: $4.28 bill
CHK: $5.66 bill
MT: $3.35 bill
BTU: $1.68 bill
WLL: $1.45 bill
CLF: $311 mill
AKS: $1.26 bill
VALE: $798 mill
ENB: $775 mill
APC: $4.65 bill
ABX: $1.98 bill
WFT: $2.44 bill
MUR: $550 mill

The greater concern is cash flow, of course. This is a mere snapshot of what beckons in the not-so-distant future for companies who rely upon commodities, which have been ravaged over the past year. For many of them, both credit and equity markets are closed. As losses mount, it will be exceedingly difficult for them to sustain payroll expenses.

Over the past year, free cash flow in the basic resource space checked in at a cool NEGATIVE $120 billion. Since oil has never been lower, I suspect losses will only accelerate to the downside.