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Opinion
Liam Denning

Coronavirus Sickens an Ailing Energy Bond Market

The excesses of the past have left many oil and gas producers exposed.

A man wearing a surgical mask walks past a gas station in Codogno, southeast of Milan.

A man wearing a surgical mask walks past a gas station in Codogno, southeast of Milan.

Photographer: MIGUEL MEDINA/AFP/Getty Images

The most obvious symptom of coronavirus’ spread in the energy sector is the slumping oil price. The less obvious, but equally serious, signs can be found in the financing market for oil and gas producers.

Exxon Mobil Corp., that haven of havens in oil, just saw its dividend yield spike above 6% for the first time since the merger that formed the modern company more than 20 years ago. If you want true stability among Big Oil in stormy seas these days, you have to go to Saudi Arabian Oil Co., or Saudi Aramco, which yields a mere 4.2% (prospectively). Then again, the remarkably subdued price moves and turnover in Aramco’s stock amid the turmoil rather underscores how its IPO was quarantined already from the wider world long before that behavior caught on elsewhere.