Owing to a fall in energy prices and difficult situation in oil and gas sector, the number of oil and gas companies that received the junk rating is increasing.
Moody’s experts provided the research report on worsening bond credit rating of the oil and gas sector. It reads that the number of companies rated B3 and lower in the first quarter of the current year increased to the record print.
It is also noted that in the latter half of 2014 most companies left the list via rating upgrades, but now the situation changed to the worst. Among the 18 companies that dropped off the list, 39% announced a default, 33% had their ratings withdrawn, and 28% had their ratings revised upward.
Risks attract more attention amid a slump in oil prices. Many investors and analysts suppose that liquidity problems of the junk bonds issuers may spread beyond the oil and gas industry, thus leading to severe consequences on the financial markets.
Since the creation of the junk corporate ratings list in 2009, companies from the energy sector made up 8% on average. However, as of March, 2015, the score climbed to 14% reaching the highest percentage ever.
