Coal-mining stocks have dropped from about 1% to 10% on Friday, with Arch Coal Inc. (NYSE: ACI) falling the most. No news on fundamentals in the coal business explain the drop, but it appears that investors have figured out that there is little chance that white knight is going to gallop in and save the coal industry.

Just on Monday, Arch Coal stock jumped more than 17% after announcing that it had extended its debt exchange offer until September 23. The offer already had been extended to August 28, but the company cannot find enough shareholders who want to make the exchange, and based on a report Friday morning at Bloomberg, distressed debt swaps may be a thing of the past already.

The big problem for miners — and oil and gas producers too — is that investors no longer seem to believe that commodity prices will turn around soon. By agreeing to exchange their notes for a longer term, creditors have little reason to expect to recover their upfront losses over any reasonable extended time frame.

And as we have noted before, some two-thirds of companies that complete a debt swap end up filing for bankruptcy within 12 months, according to Fitch Ratings. Coal miner Alpha Natural Resources filed for bankruptcy just four months after completing a debt swap.

Oil and gas producer Energy XXI Ltd. (NASDAQ: EXXI) is seeking debt swap similar to Arch Coal’s, but the oil company is getting the same pushback from current creditors.

CONSOL Energy Inc. (NYSE: CNX) traded down nearly 7.5% in the late morning Friday, and Westmoreland Coal Co. (NYSE: WLB) traded down more than 4.5%. Peabody Energy Corp. (NYSE: BTU) traded down more than 3.0%.

The rationale seems clear enough: None of these miners can avoid bankruptcy unless they reduce their interest costs, and that reduction is no longer automatic, or even likely, given the outlook for energy prices.

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