Chesapeake Energy Corp (CHK)

[Timothy Smith]

Chesapeake Energy (CHK -4.6%) bonds plunge after the company announced an amendment to its existing $4B line of credit that would allow it to incur as much as $2B in junior debt.

Under terms of the deal, CHK's existing credit line has become a secured credit facility, which can become unsecured again if the company meets certain conditions, which it does not disclose.

CHK was able to extract some concessions from its lenders, such as the ability to incur new debt and the removal of the total leveraged ratio covenant.