This data book provides a reference guide to the listed oil & gas fixed income securities, and their performance.
Last quarter's decline in issuance has continued, with the contraction in listed issuance more than offsetting the uptick in Leveraged lending, underlining the fragility of the nascent recovery.
Whether this is an aberration or a wider trend is too early to say.
This month is encapsulated by the following key takeaways:
Leveraged Debt
- January 2021 remains the stand-out month for leveraged debt issuance, but this is against a historically weak 2020. We think we think that this has been driven by a state sponsored relaxation in credit criteria, a position supported by the exceptional low level of activity since.
- Nevertheless, when you widen out the scope to the rolling 5-Year issuance, 2021 looks like being another weaker year than 2020, which was on par with 2016 - the year following the collapse in oil price.
- Margins have remained static, as risk pressures have been offset by an ultra-low interest rate environment and modest inflation.
Listed Debt
- Despite a solid issuance window in January 2021, 2Q has seen no new issuance. It remains difficult to draw too many comparisons due to Covid related market dislocation, but there is a belief in many quarters that the creeping growth in the imposition of abstract ESG measures are starting to impact credit committees' thought processes.
- Ratings distribution remains steady Q-o-Q, as the oil price rise has offset the impending raft of downgrades that were in the offing last quarter. 3Q should see start to see the impact of the higher oil price environment feeding though.
- Yields continue to demonstrate the split between the “hunt for returns” and “risk off,” with the “Investment Grade” line apparently being drawn at Moody’s “B” rating.
- While defaults are down from the highs of January, the patterning (nothing until May) suggests that defaults remain affected by the Covid insolvency restrictions. While these will start to work through as 2021 progresses, there is a feeling that the full picture will not be known until 2022.
- Against that backdrop and an ever larger refinancing mountain to work though, there will be lots of headwinds for oil & gas
In this edition, we provide the front section of the report in PDF format, while the individual debt data can be accessed from the data file (Excel).
