HOUSTON — The oil and gas industry’s junk-bond bonanza — which has caused the amount of the sector’s speculative-grade debt to triple over the past seven years — has been a major driver of its rapid growth. But the wave of easy cash could be coming to a sudden stop, according to a story on HoustonChronicle.com from energy reporter Collin Eaton.
There have been signs that the Fed could soon end the era of near-zero interest rates, which have helped haul the economy out of a slump. Higher rates could draw investors to bonds with less risk than speculative-grade debt.
If so, analysts fear the loss of investor capital could put a heavy break on production growth. Bloomberg data shows that junk bonds made up half of all corporate bond debt that U.S. independent oil and gas producers sold in the first quarter of 2014.
Article and Image sourced from fuelfix.com July 1st, 2014.