The average yields of bonds in the S&P 500 Bond Index have also fallen but only by 25 basis points during this time frame, helped in part by the inclusion of
the energy bond sector.
The S&P 500 Bond Index has returned a modestly negative total return of -0.31 % year - to - date while
the energy bond sector tracked in the S&P 500 Energy Corporate Bond Index is down 5.79 % year - to - date.
Not exact matches
As oil prices have fallen, defaults in the
sector have risen — about a quarter of all corporate
bond defaults in 2015 were
energy related, according to Moody's — and that's made traders even more reluctant to buy.
That's left a lot of junk
bond fund managers with plenty of exposure to the
energy sector at a time when oil prices have crashed and defaults, particularly among fracking companies, are rising.
Broader green
bond indices, usually an assortment of companies and
sectors often unrelated to renewable
energy generation, have seen lacklustre returns, much lower than those of appropriately - defined indices.
«The
energy sector posted stronger returns in September due to a rebound in oil prices which helped lift Canadian equities, while the
bond market slipped into negative territory after strong Canadian economic growth led the Bank of Canada to raise interest rates for the first time in seven years,» said James Rausch, Head of Client Coverage, Canada, RBC Investor & Treasury Services.
The
energy sector has been outperforming for the past few months, predominantly down to higher oil prices, and we're starting to see
bond yields move higher.
The recent oil price rally has pushed the
energy sector upward in both the equity and
bond markets.
We also issued 7 year and 10 year cedi - denominated
bonds, totaling GH cents 4.7 billion, which have halved the $ 2.4 billion
energy debt we inherited, and have helped improve the liquidity of the banks, and the balance sheets of the SOEs in the
energy sector.
In the same month, we announced a $ 2.4 million
bond to clear legacy debts in the
energy sector, translates that to Ghc12billion.
Mr. Speaker, Government streamlined ESLA flows to accommodate all the existing legacy debts (about GH cents 10 billion) owed by the
energy sector firms to banks and suppliers, and took steps to issue an ESLA - backed
bond to pay off these debts.
Mr. Speaker, Government also sponsored the issuance ofCedi - denominated medium - to - long - term
bonds (7 and 10 year
bonds) on the back of the ESLA receivables to facilitate the clearance of the
sector's legacy debts.Again, the Akufo - Addo Government is determined to turn away from the mismangement of the
energy sector in the past which led to the accumulation of billions of debts by entities, such as BOST, to managing these startegic entities with integrity and efficiency.
The Minority side in Parliament is alleging that the governing New Patriotic Party (NPP) is planning to raise a
bond of $ 2.4 billion
bond using the
energy sector levy as collateral for a period of 15 years.
«The proceeds from the
bond issuance has helped reduce Non-Performing Loans within the banking
sector and strengthened the balance sheets of the SOEs in the
energy sector.
The Member of Parliament for Bolga Central, Isaac Adongo, has described the reasons given by the yet - to - be issued
energy sector bond as baseless.
According to him, his administration also issued the first green
bond that would act as a catalyst for investments in renewable
energy and afforestation projects «as we have established the Agro Rangers Unit within the Nigeria Security and Civil Defence Corps to protect the investments recorded in agricultural
sector across the country.»
From a
sector perspective,
energy, materials and financials make up more than a third of the MSCI Europe Index.2 Many of these companies tend do well when inflation is rising and
bond yields are rising because typically inflation nudges up commodity prices and financial companies tend to profit when the yield curve steepens.
My previous picks include CQS New City High Yield, which holds
bonds, shares and preference shares; Gravis Clean
Energy, which invests in renewables; infrastructure - debt fund Sequoia Economic Infrastructure; medical - facilities fund MedicX; and HICL, which backs public -
sector infrastructure.
If you're not interested in the TSX Composite, feel free to do a similar strategy using the TSX 60, the U.S. market, Canada's REIT or
energy sectors, or even
bonds if you're a little nervous about that whole area.
The
energy and materials
sectors of the
bond markets have been a real drag on performance on the junk
bond markets as
bond prices have fallen.
Unfortunately, that segment of the
bond market has endured
sector risk (
energy and materials) as well as signs the default rate is rising back toward historical norms.
The return of the S&P U.S. Issued High Yield Corporate
Bond Index ex
energy and materials
sectors would be less affected, returning -2.14 % for the month and -0.05 % YTD.
The recent oil price rally has pushed the
energy sector upward in both the equity and
bond markets.
The ETFs used in the screen were EEM (emerging markets), EFA (EAFE Index), GLD (gold), HYG (high yield
bond), IEF (7 - 10 year treasury), SHY (short - term
bond, close ETF substitute for «cash»), SPY (S&P 500), TLT (20 + year treasury
bond), VBR (small - cap value), VNQ (REIT), XLE (
energy sector), XLU (utility
sector), and PCY (Emerging market
bonds).
Energy and Puerto Rico remain the
sectors to watch as they continue to be drags on the
bond markets.
The
energy and materials
sectors have been significant drags on both the stock and
bond markets.
Exhibit 1 shows the
energy sector (14 %) of the S&P U.S. Issued High Yield Corporate
Bond Index in comparison with movements in oil prices.
In the S&P U.S. Issued High Yield Corporate
Bond Index, the
energy sector has had more of an impact, as the market value weight of the
sector is 14.4 % of the index.
The higher yielding
sectors of
Energy, Materials, Telecommunications and Utilities combine for a weight of 24 % of the index and each
sector has seen robust performance in 2016 so far, The two leading
sectors are the S&P 500
Energy Corporate
Bond Index returning over 16 % year - to - date and the S&P 500 Materials Corporate
Bond Index returning over 14 %.
The
energy sector of the S&P U.S. Issued Investment Grade Corporate
Bond Index accounts for 8.6 % of the index's market value.
With oil back up at USD 50 (as quoted by the NYMEX light sweet crude oil futures), the
energy sector (15 %) of the S&P U.S. Issued High Yield Corporate
Bond Index returned 5.73 % in February.
The
energy sector alone has $ 248 billion in junk
bond debt — some of the riskiest debt there is!
In a potentially significant development, Barron's is reporting that Barclays has downgraded the entire electric
sector of the US high - grade
bond market, largely over evidence that solar and other disruptive
energy technologies are proving to be increasingly viable competition.
Clients of
Bond Dickinson LLP rate its ability to provide «depth of expertise at competitive rates» to regional and national companies in the
energy, private equity and insurance
sectors.
Bond Pearce
energy partner Luke Gabb, who has led the Aberdeen office opening and oversaw the hire of the McGrigors team, says the firm is looking to capitalise on Aberdeen's buoyant
energy sector.