DISTRESSED DAILY: $77B of Junk Energy Poised for Credit Upgrade

July 13, 2021, 12:00 PM UTC

More than one-third of high-yield energy debt could move to investment grade over the next 12 to 24 months as rising oil prices boost credit outlooks across the sector, according to CreditSights Inc.

Almost 37%, or $77 billion, of energy bonds in the high-yield index could be upgraded, including 8 of the 10 largest issuers, the research firm said in a note. More than half of the oil and gas producers in the index are fallen angels -- companies that used to be investment grade -- that could be upgraded, Charles Johnston and Pengyu Xiong wrote.

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