Morgan Stanley is bearish on chemical giant Conoco, strategically shorting the bond market by leveraging the energy crisis

格隆汇3月11日｜Morgan Stanley's credit trading department is promoting a short-selling strategy to investors targeting bonds issued by Kronos Worldwide (KRO.US). This German titanium dioxide manufacturer has been struggling, and the surge in energy costs caused by the Iran war has further worsened its situation. According to informed sources, the trading desk began recommending shorting the company's €426 million (approximately $494 million) notes due in March 2029 to investors last month. Sources said that even though the bond prices have already plummeted, traders have recently reiterated this view. Even before the turmoil in the Middle East pushed up energy prices, companies in the chemical industry, which is energy-intensive, were already grappling with weak demand and high input costs. This has made chemical companies a preferred target for short sellers. In a report released on Monday, Kronos pointed out that the high cost and low selling price of titanium dioxide used in products such as coatings and plastics led to a fourth-quarter loss of $82.8 million and expanded the annual loss to $110.9 million. Since mid-February, Kronos' stock price has fallen by about 16% to $5.60, but it is still up compared to the beginning of the year.