How the Drop in Oil Prices Impacts the Junk Bond Market

The video discusses the current state of debt markets, focusing on the impact of declining oil prices and trade tensions between the US and China. It highlights the challenges faced by the shale industry and the performance of high yield energy bonds. The analysis includes specific examples of price actions in shale bonds, emphasizing the broader implications for the bond market.

What is one of the main reasons investors are downgrading their expectations for global growth?

• Stable currency exchange rates

• Declining oil prices

• Rising interest rates

• Increasing inflation

How have the trade wars between the US and China affected crude prices?

• They have stabilized the prices

• They have had no effect on the prices

• They have increased the prices

• They have deepened the decline in prices

What was the strategy of shale companies in 2013 and 2014?

• Reducing their leverage

• Diversifying into other markets

• Increasing their leverage to build infrastructure

• Focusing on renewable energy

What is the gain percentage of high yield energy bonds compared to the broader high yield bond market?

• 5.0% compared to 10.0%

• 4.0% compared to 8.0%

• 7.5% compared to 12.0%

• 3.2% compared to 9.6%

Which bonds experienced significant losses as oil prices continued to drop?

• Texas energy bonds and Florida resource bonds

• California resource bonds and Oasis petroleum bonds

• New York shale bonds and Nevada petroleum bonds

• Alaska oil bonds and Arizona energy bonds