Oil Plunge Leaves $27 Billion of Energy Bonds Junk Priced
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The biggest plunge in oil prices since 2008 is prompting bond traders to treat $27 billion of investment-grade energy debt as junk amid concern those companies will have to cut spending to conserve cash.
Investors are demanding more yield premium to own the debt of high-grade companies including Transocean Ltd., Noble Corp. and Continental Resources Inc. than the average for bonds with the highest junk rating, according to data compiled by Bloomberg. Oil has slumped 8.7 percent this year to $48.65 a barrel through yesterday, adding to the more than 50 percent decline since its June 20 peak.