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Peabody bankruptcy pushes coal loan default rate beyond peak to nearly 70%

Sincethe bankruptcy filingof Peabody Energy Corp.on April 13, the loan default rate for U.S. mining and metals companies rose from25% to 29%, according to Fitch Ratings, with the coal sub-sector rate approaching70%.

Fitchadded that about $8.4 billion of loan and bond debt is affected for the wider metalsand mining sector.

Peabodyfiled for bankruptcy protection April 13 after months of growing speculation thatthe company would not be able to meet its debt obligations. The filing adds Peabodyto a growing list of major U.S. coal producers that have sought Chapter 11 protectionover the last year, including PatriotCoal Corp., Alpha NaturalResources Inc., WalterEnergy Inc. and Arch CoalInc.

Followingthe bankruptcy filing of Arch in January, Fitch noted that the coal subsector default rate of 43% representedan "unprecedented peak."

Accordingto a Fitch note, Peabody faced a series of market and competitive in recent months leading to "cashburn and reduced liquidity."

"Thedebt-laden capital structure became unsustainable as cash flows worsened and accessto capital markets evaporated," the agency wrote.