Wells’s Patel Says Energy Defaults Won’t Rock High-YieldChapin Wright
Oil prices that haven’t reached their lowest yet will lead to defaults by a “handful” of smaller junk-rated energy companies, according to Margie Patel, a money manager at Wells Capital Management Inc.
“I don’t think defaults in energy will be big enough to rock the whole high-yield market by very much,” Patel said today in an interview with Tom Keene and Michael McKee on Bloomberg Radio’s “Bloomberg Surveillance.”
Defaults will come from some of the “weaker links” among energy and energy-related companies that “probably shouldn’t have had access to the market and that have very high cost production,” said Patel, who oversees $1.4 billion for the Wells Fargo & Co. unit in Boston.
“High-yield energy is still under tremendous pressure,” Patel said. “It’s under pressure because it doesn’t look like we’ve seen a bottom in prices yet.”
West Texas Intermediate crude slid 4.9 percent to $60.69 a barrel at 11:48 a.m. in New York, while Brent fell below $65 for the first time since 2009.