This data book provides a reference guide to the listed oil & gas fixed income securities, and their performance.
This quarter has seen a cautious recovery in the debt markets.
The recovery is fragile, and susceptible to shocks suitably severe, from numerous sources, to arrest that recovery and send it in to reverse.
This month is encapsulated by 7 key take aways:
- Debt issuance has continued in to 2021, and while January 2021's level is an improvement on December 2020, we will maintain a watching brief. Nevertheless, the start of the year is promising.
- As highlighted above, there has been a strong start to the year has been made, but the year is in its infancy, and there is significant uncertainty in the market about US domestic policy towards oil & gas.
- The number of issues has increased, mostly unrated, which means that there has been relative stability in the ratings distribution. The increase in un-rated issuance indicates that the markets may could be in "risk on" mode, even in the fixed income markets.
- The pricing recovery has been in step with the improving oil price outlook, which has been a headwind for yields from an investors' perspective. That said, holders of lower ratings (Baa>), holding “tail end” duration instruments are reflecting the wider concerns that refinancing those positions could be troublesome.
- The sector maturity profile still causes some indigestion, especially in the context of receding support for oil & gas. New entrants may be squeezed out by holders seeking to support their existing investments.
- While there were no defaults reported in the first month of 2021, a rash of defaults in the final quarter of 2020 gave an already record year a sting in the tail, leaving some investors nursing concerns that 2021 may could be more of the same.
- The rolling monthly summary for the last 18 months doesn't make for pretty reading, the impact of COVID has been clear to see. With lock-downs still persisting, albeit offset by a higher oil price, there remains concerns that the US domestic oil & gas sector could be in for a torrid time from the new Biden administration.
Access the document here.
