Chesapeake Energy Corp (CHK)

[LouisDesyjr]

Using the credit line does not help the bonds much

The problem is that the credit line is higher in priority than the bonds, so if CHK starts drawing down the credit line, the bonds have less to recover from and there is nothing that can do done to stop CHK.

Over the short term it may be positive, but if CHK draws down the entire credit line, it is bad over the long term; since now there will be billions in borrowings ahead of them in priority.

Louis J. Desy Jr.