Mudrick Capital CIO on BBB Bonds, Distressed Debt, Oil

The transcript discusses the current state of Triple B rated debts, highlighting their growth from $700 billion in 2008 to nearly $3 trillion today. It explores the potential risks of these debts being downgraded to junk status during a recession. The conversation also covers the implications of a large distressed debt market, even in a mild recession, due to the significant market size. Investment opportunities are identified in over-leveraged companies and small to medium-sized businesses. The oil sector is analyzed, noting low investment levels and disciplined management, suggesting potential for contrarian investments.

What is the potential impact of a recession on Triple B rated debts?

• They could be downgraded to junk status.

• They will be removed from the market.

• They will remain stable with no change.

• They may be upgraded to higher ratings.

How has the size of the Triple B market changed from 2008 to today?

• It has decreased significantly.

• It has remained the same.

• It has doubled in size.

• It has increased from $700 billion to nearly $3 trillion.

What economic conditions are encouraging companies to take on more debt?

• Stable interest rates and stagnant growth.

• Volatile interest rates and declining growth.

• High interest rates and low economic growth.

• Low interest rates and good economic growth.

What is a key characteristic of the current energy sector according to the transcript?

• High rig count and increasing production.

• Low multiples and disciplined management.

• Stable prices and high investment.

• Decreasing demand and high stockpiles.

What has been the trend in the rig count since 2015?

• It has fluctuated without a clear trend.

• It has decreased to about 800.

• It has remained constant.

• It has increased to over 2000.