• 4 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 7 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 1 hour IMO 2020 could create fierce competition for scarce water resources
  • 15 hours Old - New Kim: Nuclear Negotiations With U. S. Will Never Resume Unless Washington Changes Its Position
  • 11 mins Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 7 hours Theresa May to Step Down
  • 11 hours IMO2020 To scrub or not to scrub
  • 14 hours India After Elections: Economy And Hindu Are The First Modi’s Challenges
  • 32 mins Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 22 mins Total nonsense in climate debate
  • 11 hours Devastating Sanctions: Iran and Venezuela hurting
  • 3 hours IRAN makes threats, rattles sabre . . . . U.S. makes threats, rattles sabre . . . . IRAQ steps up and plays the mediator. THIS ALLOWS BOTH SIDES TO "SAVE FACE". Then serious negotiations start.
  • 227 days Epic Fail as Solar Crashes and Wind Refuses to Blow
  • 13 hours Compensation For A Trade War: Argentina’s Financial Crisis Creates An Opportunity For China
  • 9 hours Level-Headed Analysis of the Future of U.S. Shale Oil Industry

Here's The Real Reason High Yield Energy Credit Risk Collapsed This Morning

A few market participants have noticed that the U.S. High Yield Energy sector's credit risk collapsed 170bps this morning according to Bloomberg's data. This is the biggest plunge (rally) in the index of "incredibly risky stuff" on record and in the face of new cycle lows in crude, borrowing bases contracting, and rig counts crashing, this seemed odd... well here is why the index collapsed (spoiler alert - do not get excited).

So this happened and everyone rejoiced...

But here is why...

(Click to enlarge)

So what we see here is Rex Energy - trading at 6,901bps saw its risk drop 760bps and Mongolian Mining Corp trading at an epic 14,197bps saw its risk drop 413bps... and that compressed the index OAS overall.

In other words - the absolute riskiest of the risky crap end of the spectrum of verging on default energy firms have seen risk narrow (likely model valuations as opposed to actual transactions) and the headline index spread collapses.

So don't buy Energy stocks with both hands and feet just yet... it's just an index aberration.

By Zerohedge

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News