U.S. energy companies have defaulted on $39 billion in high-yield bonds so far this year, more than double the $15 billion delinquent last year, according to a new report from the ratings agency Fitch.
Almost one in three U.S. oil and gas exploration and production companies defaulted on high-yield bonds this year. One in five energy companies did. In contrast, less than 1 percent of energy companies lapsed on such loans in 2014, at the height of the shale oil boom.
The national Venezuelan oil company, Petroleos de Venezuela, has almost $13 billion in outstanding high-yield bonds and tops Fitch’s current “bonds of concern” list. The Brazilian company Odebrecht Offshore Drilling holds $3 billion. California Resources Corp., an oil and gas company out of Los Angeles, has $2.8 billion outstanding. FTS International, a large private well completion firm out of Fort Worth, has almost $800 million out, the most of any Texas energy company.
Fitch predicts sunnier days to come: Just 3 percent of U.S. energy companies will default in 2017, representing about $6 billion, the report says.
The overall U.S. high yield default rate will also improve to 3 percent in 2017, representing almost $36 billion, in comparison to $59 billion posted so far this year and $40 billion in 2015.
Energy and metals/mining account for 84 percent of the total U.S. defaults so far this year.