Hess CEO John Hess on the problems surrounding oil. With CNBC’s Brian Sullivan and the Fast Money traders, Tim Seymour, Brian Kelly, Dan Nathan and Guy Adami.
As markets for energy companies’ bonds crater on lower crude oil prices, bond analysts offer one big piece of comforting news amid the chaos: Very few major energy companies have any debt due before next year, when the crisis sparked by the COVID-19 coronavirus is likely to be over.
Bond markets have joined stock investors in panic since mid-February, pushing yields on 10-year U.S. treasurys to historic lows, and widening the spread between yields on treasuries and low-rated corporate debt, known as junk bonds, to nearly 7 percentage points. Most credit spreads are at levels not seen since 2016. The Federal Reserve stepped in Thursday, announcing it will pump $1.5 trillion in liquidity into the financial system through treasury purchases and other moves.
There’s little to suggest that a credit crisis is brewing, even in the oil and gas sector, which has been hit hard by coronavirus and the simultaneous spat between Saudi Arabia and Russia over oil production quotas that has sent crude oil prices down by a third, to $33 a barrel, on the Saudis’ promise to boost production. While the sector is known for a large number of companies with big debt loads or low bond ratings, analysts say a near-term spike in defaults isn’t likely.
`It’s tricky to watch the granular details,” CFRA Research energy strategist Stewart Glickman said. “Even if a company has a lot of debt, if it’s not maturing they can buy themselves a window of time.″
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