Grid IconAll Posts Blog

High Yield Energy Sector Outperforms Aggregate Market Despite Risks

Posted on June 23, 2020

By: Caesar Silvestro

The US Energy high yield sector tightening tear is continuing in June. So far this month, Advantage Data’s High Yield Energy Index has tightened 154 bps to 9.57% while the ADI High Yield Index has tightened 72 bps to 6.44%.  The spread between HY Energy and the HY Index is now only 313 bps, it was 1,100 bps after March’s credit blow-out. 

Improved oil pricing has certainly helped Energy’s credit story. WTI is up about 11% this month to $40. However, all the news has not been constructive for the sector during the rally. 

Energy companies have had their liquidity reduced.  For example, Oasis Petroleum had its borrowing base cut from $1.3 billion to $625 million in April and Antero Resources’ base was shrunk from $4.5 billion to $2.85 billion in March.

Restructuring activity is increasing. Whiting Petroleum filed for bankruptcy protection in April. Chesapeake Energy skipped an interest payment on June 15th, and News source reported that Schlumberger is about to implement a billion-dollar restructuring plan that could lay off workers and write down the value of its assets.

The Energy sector has had an impressive tightening move. It will be interesting to see if Energy can maintain its positive momentum given likely liquidity reductions and restructuring headwinds. 

High Yield Energy Sector Continues to Outperform the Aggregate Market

Caesar Silvestro has nearly 20 years of buy-side and sell-side research experience in the High Yield and Distressed markets. He was an Executive Director at BBVA Securities focused on the Energy Sector and an Executive Director at MF Global overseeing the Distressed/High Yield research effort. He holds a MBA in Finance from NYU Stern School of Business and is a graduate of Franklin and Marshall College.

Disclaimer: The information on this blog site is for informational purposes only.  Advantage Data makes no representations as to the accuracy, completeness, suitability, or validity, of any information. Advantage Data will not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. All information is provided AS-IS with no warranties and confers no rights. Information is not and should not be considered professional financial investment advice. In all events, Advantage Data is not a broker-dealer, shall not operate as a broker or a dealer, is not holding itself out as a broker or dealer and is not engaged in the business of buying or selling securities or otherwise required to register with the National Association of Securities Dealers.

Are you using AdvantageData?

AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:

  • 500,000+ U.S. and international corporate bonds
  • Over 300,000+ BDC fair value assessments dating back to 2000
  • Over 22,000+ syndicated loans
  • Over 100 equity markets worldwide
  • One platform 15 products and services from debt to loans to mid-market
  • Used by top buy and sell-side firms worldwide


facebook share icon twitter share icon linkedin share icon
Ready to get Started? Free Trial