El, Debt to Mkt Cap is not really irrelevant because there are often covenants in loan docs that require a certain ratio (see the Babcock debacle).
Since debt and equity are essentially balancing items it means that my choice is between raising equity or raising debt - if my share price is in the toilet that means the market considers me a bad bet/investment. So raising equity will be expensive and dilutionary. So, I then go to my bankers for debt but now I am pretty leveraged up and they wonder as well what the market is saying (don't forget, bankers have the "Efficient Market Theory" in their genes).
So it is a crisis of confidence. You are right about the earnings to interest cover as a ratio is important and how soon the debt comes due but with the copper price in the basement, that part of the equation is a bit shakey as well.
JMHO.
PNA Price at posting:
12.3¢ Sentiment: ST Buy Disclosure: Not Held
