Junk Energy Companies Feel More Pain as Borrowing Costs Top 20%
- `Well deserved' negativity amid asset-crossing economic slump
- Oil at $30? Goldman Sachs sees below $20, Pimco forecasts $50
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The cost for U.S. junk-rated energy companies to borrow in the bond market exceeded 20 percent for the first time ever after Goldman Sachs Group Inc. said oil may drop below $20 a barrel.
The difference between the price of holding high-yield debt sold by energy companies and ultra-safe Treasuries widened to record levels, according to Bank of America Merrill Lynch indexes. The move was part of a global rout that has seen stocks tumble toward a bear market and volatility rise amid fears of a worldwide economic slowdown. Crude could drop “into the teens,” from about $30 on Tuesday, before supply and demand are brought back into balance, according to Goldman Sachs.