Energy Industry Could be Hit by Wave of Debt Defaults

By Unknown

Sabtu, 27 Agustus 2016

Energy Industry Could be Hit by Wave of Debt Defaults

Brace for a wave of defaults in the oil fields.

energy companies who charged on the debt during the oil boom may have trouble repaying the loans. Oil prices have fallen over 65% since the middle of last year to below $ 37 a barrel this week and there is no recovery in sight.

is fueling the financial turmoil on Wall Street with Standard & Poor memos recently warning that a superb 50% of energy junk bonds are "distressed", which means they are at risk of default.
Overall, about $ 180 billion of debt is in distress. It is the highest level since the end of the Great Recession and much is in energy companies.

"The wave of defaults Energy looming in the wings could make for some very bumpy roads ahead in 2016," Bespoke Investment Group wrote in a recent report. The company describes the environment of the junk bond market as "pretty awful" recently.

This is a dramatic change in recent go-go years, when the boom in shale oil and cheap energy companies borrowing costs helped to take loads of debt to finance the expensive drilling operations.

US oil production has soared, creating a glut of gigantic currently drives offer the lowest prices and undermine the ability of many energy companies to repay their debt.

"The tide can turn. Excess leverage during good years dented credit profiles," analysts at the research firm Markit wrote in a report released Wednesday.

via CNN

[ad_2]
Read More: Energy Industry Could be Hit by Wave of Debt Defaults

Share :

Facebook Twitter Google+