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High Yield Energy Debt: The Writing Is On The Wall/Oil

Published Thu, 21 Mar 2019 10:14:25 -0400 on Seeking Alpha

Has US Bond Volatility Died?
It certainly seems as if US bond volatility is dying.
March 19th marked the lowest close for the MOVE index - that's the bond market's equivalent of the VIX Index (VXXB, TVIX, UVXY, VXX, VXXB, VIXM, VIXX, VIXY) - since it began being tracked, back in 1988.

Source: Author friend's mobile phone
If so, this is certainly not being reflected when it comes to energy (XLE*, IYE, XOP, IXC, VDE, OIH) bonds (AGG, BND).
*Energy Select Sector SPDR ETF (XLE)
There are still some serious potholes in debt of US oil (OIL**, USO***, DBO) and gas (UNG, UGAZ) companies.
**Path S&P Crude Oil Total Return Index ETN (OIL)
***The United States Oil ETF, LP (USO)
Take EP Energy (EPE) as an example.
The company's bonds lost 40 cents (on the dollar) over the past two days after it reported a meaningful operating loss on asset write-downs and lower Q1 production.

EPE is certainly not alone in here.
Bond Spreads: Energy vs. the Overall Market
As a matter of fact, investors are now demanding the greatest premium to own HY energy debt relative to the broader junk-bond (HYG, JNK, BKLN, SJNK, SRLN, SHYG) market since December 2018.

The below chart shows the change in US Corporate Option-Adjusted Spreads - across all credit ratings - since the beginning of the year. As you can see, spreads are contracting across the board, leading to bonds, high-yield and investment-grade alike, gladly participating in the... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF 108.94   0.0 0.00 6.07 5.58
ISHARES JPMORGAN USD EMERGING MARKETS BOND FUND 113.92   0.0 0.00 6.17 5.43
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND 87.32   0.0 0.00 4.60 5.27
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 272.32   0.0 0.00 5.67 2.10
ISHARES BARCLAYS TIPS BOND FUND 115.82   0.0 0.00 2.15 1.85
SPDR S&P 500 ETF 301.29   0.0 0.00 5.42 1.82
POWERSHARES QQQ TRUST SERIES 1 193.23   0.0 0.00 1.49 0.78
ISHARES BARCLAYS AGGREGATE BOND FUND  
VANGUARD TOTAL BOND MARKET ETF  
VANGUARD SHORT-TERM BOND ETF  

SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF - JNK
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF - JNK  


Older articles featuring Spdr Barclays Capital High Yield Bond Etf (JNK):
My Dividend Growth Portfolio Q1 Update: 24 Holdings, 1 Sell, 4.21% Yield
Danger Or Opportunity In High-Yield Bonds
Impact Of Oil Collapse On High Yield Bond Market
HYG: Tide Going Out For High-Yield Borrowers
U.S. High Yield Faces Double Whammy
Will Recent Downside Momentum In Treasury Yields Accelerate?
Municipal Bond Perspective: Approach High Yield With Caution In 2020
All Top Paying Dividend ETFs Are Not Created Equal
DGI Capital Southwest Yielding 9.5% Before Upcoming Increases
SWAN Ares Capital: 9% Yield And Beating The S&P 500

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