Junk Rated US Oil Companies Raise a Record $20bn via Bonds YTD

Energy and power companies have raised more than $20bn via high yield bonds year-to-date (YTD) as per Refinitiv data. This is an all-time record since this data was tracked from 1996 and comes after many of these companies were hurt by the pandemic and subsequent low oil prices last year. A law firm said that more than 100 US Oil & Gas producers/services went bankrupt in 2020 accounting for over $108bn in debt. Companies like Chesapeake (raising $1bn), Murphy (raising $500mn), ShelfDrilling (raising $310mn), CGG (raising $500mn) etc. have tapped the markets this year. While prices of oil companies’ bonds have been on an uptrend since late last year, they witnessed a slight slump last week on the back of the fall in oil prices.

Occidental, rated BB, saw its dollar 3.5% bonds due 2025 rise from ~80 levels in November last year to 101 earlier this month, before falling slightly to currently trade at 97.75 yielding 4.08%. “It makes sense that energy issuers would try to tap into a robust high yield market, especially given the revival in oil prices,” said Matt Eagan, a PM at Loomis Sayles.

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