Over the past 24 hours, we’ve documented the recent trials and tribulations of HY Energy, which is (finally) feeling the heat from recent gyrations in oil prices – even if HY as a whole has thus far remained resilient.
On Saturday morning, we noted that HY Energy issuance evaporated altogether in June and then, yesterday afternoon, we brought you some hilarious commentary from Anadarko’s Al Walker, who reminds you that because US shale is an alcoholic, you should probably stop feeding the industry shots of Louis XIII.
“Just a few weeks ago, bond investors were whistling past the graveyard and underestimating the risks that low oil prices posed,” Ryan Kelly of PGIM, the investment management arm of Prudential Financial Inc., told WSJ late last month after crude plunged into a bear market.
Now “the [energy] high-yield bond market is waking up,” he went on to caution.
Right. And it’s just going to be a matter of time before the HY bond market as a whole “wakes up.”
Which means if you’re long junk in any form (especially via ETFs that you wrongly assume are somehow more liquid than the underlying credits), you should keep a really – really – close eye on the following two charts if oil can’t manage to sustain a rally…