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I've been reading lots of these type articles lately. Not exactly a prescription for a bottom. Seems the only ones still bearish on junk bonds are Gundlach, Jim Rogers, and Carl Icahn. I thought at the beginning of the year it could be the year for the junk and had around 15% there. I was WRONG and sold. Also like the preferreds and WRONG there immediately. When I am WRONG as is often the case I sell. Still have around 81% in the junk munis and wondering when and if they will finally succumb to the debacle. There will be stress in many municipalities impacted by the decline in oil.
Still have around 81% in the junk munis and wondering when and if they will finally succumb to the debacle. There will be stress in many municipalities impacted by the decline in oil.
I think the oil decline might be offsetting - a decrease in tax income is offset by lower operating costs by the munis. I'm planning to stop my re-investment of muni dividends and build up cash for High Yield Corps and High Yield Emerging Market Bonds.
"Psst, we've got billions of this junk lying around about to default. We've got to find some suckers--I mean investors--to unload it on. Say we're bullish."
I'm locked out of PRHYX, but keeping an eye on RPIHX their new global version, also run by Vaselkiv. Doesn't look nearly beaten-up enough yet for me to want to bite. Even if oil recovers some, the damage's been done.
And already got enough hot pans on the burners. Ouch!
High Yield Energy: Fear+ Forced Selling = More of the Same ? Bond Funds Remain Confident as Crude Rout Worsens Published January 20, 2016 Markets Reuters More investors may lose patience in the contrarian bet and pull their money, forcing managers to sell energy credits to raise cash, said Jeff Tjornehoj, head of Americas research at Lipper.
Big bond investors who have bet on high-yield oil producers are sticking to losing bets, waiting for a turnaround in the price of crude, even though their performance has suffered and fund assets have shrunk as oil has plunged. "We have not capitulated in this down trade," Buchanan said. He said it was "just a matter of time" before oil producers would begin to significantly cut back production. He said he would rethink his energy exposure if he saw more compelling yield opportunities in sectors other than energy. Western Asset Short Duration High Income Fund SHIAX Investors pulled $348 million from Buchanan's fund last year, cutting its assets to $700 million from a peak of $1.5 billion in June 2014, Lipper data shows. The fund has lost 4 percent this year. EVBAX Gaffney increased her exposure to energy bonds overall in the fourth quarter from 11.2 percent to 16 percent, with the fund's bets on high-yield energy bonds increasing from 3.3 percent to 5.8 percent. She reiterated a call she made in October to Reuters that a number of her fund's holdings could gain by 30 percent or more over the next two years. Investors pulled $856 million from Gaffney's fund last year, slashing the fund's assets by over 40 percent to $780 million from a peak of about $2 billion last February, according to Lipper data. The fund has lost 6.5 percent this year.
BJBHX Aberdeen Asset Management, said the Aberdeen Global High Income Fund cut its exposure to energy overall to 7.3 percent and to high-yield E&P debt to 2.6 percent, from 10 percent and 5 percent, respectively, in October. He said, however, that the cash raised from the sales may eventually be used to invest in more high-yield energy credits.
Investors withdrew about 46 percent of the Aberdeen fund's assets last year, reducing its size to $989 million, according to Lipper data. The fund has lost 3 percent this year. The BofA Merrill Lynch U.S. High Yield Energy Index posted its second-worst week ever last week, delivering a loss of 8.7 percent, exceeded only by an 11.1 percent loss in October 2008. The average yield on an energy junk bond hit a record high of 18.44 percent on Tuesday.
Moody's places 175 oil, gas and mining companies on review for downgrade Jan 22 2016, 08:28 ET | By: Carl Surran, SA News Editor Moody's places 120 oil and gas companies on review for a downgrade, in a sweeping global review that includes all major regions..Warning of "a substantial risk that prices may recover much more slowly over the medium term than many companies expect http://seekingalpha.com/news/3045856-moodys-places-175-oil-gas-mining-companies-review-downgrade
Fri Jan 22, 2016 8:37pm EST Moody's puts 175 commodity firms on review over bleak outlook LONDON | BY RON BOUSSO It (Moody's)said it was likely to conclude the review by the end of the first quarter which could include multiple-notch downgrades for some companies, particularly in North America. A ratings downgrade makes borrowing more expensive for companies. "Even under a scenario with a modest recovery from current prices, producing companies and the drillers and service companies that support them will experience rising financial stress with much lower cash flows," it said. http://www.reuters.com/article/us-energy-ratings-idUSKCN0V00Y6
What in the world will those Alaskans do to fill the void, now that they won't be able to simply kick back and collect "their" oil royalty checks every month, after sitting on their asses?
Comments
I'm planning to stop my re-investment of muni dividends and build up cash for High Yield
Corps and High Yield Emerging Market Bonds.
http://www.foxbusiness.com/markets/2016/01/05/jim-rogers-long-china-short-u-s-junk-bonds.html
Doesn't look nearly beaten-up enough yet for me to want to bite. Even if oil recovers some, the damage's been done.
And already got enough hot pans on the burners. Ouch!
Bond Funds Remain Confident as Crude Rout Worsens
Published January 20, 2016 Markets Reuters
More investors may lose patience in the contrarian bet and pull their money, forcing managers to sell energy credits to raise cash, said Jeff Tjornehoj, head of Americas research at Lipper.
Big bond investors who have bet on high-yield oil producers are sticking to losing bets, waiting for a turnaround in the price of crude, even though their performance has suffered and fund assets have shrunk as oil has plunged.
"We have not capitulated in this down trade," Buchanan said. He said it was "just a matter of time" before oil producers would begin to significantly cut back production. He said he would rethink his energy exposure if he saw more compelling yield opportunities in sectors other than energy.
Western Asset Short Duration High Income Fund SHIAX
Investors pulled $348 million from Buchanan's fund last year, cutting its assets to $700 million from a peak of $1.5 billion in June 2014, Lipper data shows. The fund has lost 4 percent this year.
EVBAX
Gaffney increased her exposure to energy bonds overall in the fourth quarter from 11.2 percent to 16 percent, with the fund's bets on high-yield energy bonds increasing from 3.3 percent to 5.8 percent.
She reiterated a call she made in October to Reuters that a number of her fund's holdings could gain by 30 percent or more over the next two years.
Investors pulled $856 million from Gaffney's fund last year, slashing the fund's assets by over 40 percent to $780 million from a peak of about $2 billion last February, according to Lipper data. The fund has lost 6.5 percent this year.
BJBHX
Aberdeen Asset Management, said the Aberdeen Global High Income Fund cut its exposure to energy overall to 7.3 percent and to high-yield E&P debt to 2.6 percent, from 10 percent and 5 percent, respectively, in October. He said, however, that the cash raised from the sales may eventually be used to invest in more high-yield energy credits.
Investors withdrew about 46 percent of the Aberdeen fund's assets last year, reducing its size to $989 million, according to Lipper data. The fund has lost 3 percent this year.
The BofA Merrill Lynch U.S. High Yield Energy Index posted its second-worst week ever last week, delivering a loss of 8.7 percent, exceeded only by an 11.1 percent loss in October 2008. The average yield on an energy junk bond hit a record high of 18.44 percent on Tuesday.
Lipper's Tjornehoj said that managers may eventually be right, and energy spreads will narrow. "But by that time they may have very little money in the portfolio to crow about."
http://www.foxbusiness.com/markets/2016/01/20/bond-funds-remain-confident-as-crude-rout-worsens.html
Photo source
http://fuelfix.com/blog/2016/01/22/moodys-places-120-oil-and-gas-companies-on-review-for-downgrade/#36696101=8
Moody's places 175 oil, gas and mining companies on review for downgrade
Jan 22 2016, 08:28 ET | By: Carl Surran, SA News Editor
Moody's places 120 oil and gas companies on review for a downgrade, in a sweeping global review that includes all major regions..Warning of "a substantial risk that prices may recover much more slowly over the medium term than many companies expect
http://seekingalpha.com/news/3045856-moodys-places-175-oil-gas-mining-companies-review-downgrade
Fri Jan 22, 2016 8:37pm EST
Moody's puts 175 commodity firms on review over bleak outlook
LONDON | BY RON BOUSSO
It (Moody's)said it was likely to conclude the review by the end of the first quarter which could include multiple-notch downgrades for some companies, particularly in North America.
A ratings downgrade makes borrowing more expensive for companies.
"Even under a scenario with a modest recovery from current prices, producing companies and the drillers and service companies that support them will experience rising financial stress with much lower cash flows," it said.
http://www.reuters.com/article/us-energy-ratings-idUSKCN0V00Y6
Rating Action: Moody's reviews energy companies in the US for downgrade
Global Credit Research - 21 Jan 2016
https://www.moodys.com/research/Moodys-reviews-energy-companies-in-the-US-for-downgrade--PR_342569
http://www.bloomberg.com/news/articles/2016-01-22/oil-s-collapse-hurting-states-that-were-counting-on-50-a-barrel
What in the world will those Alaskans do to fill the void, now that they won't be able to simply kick back and collect "their" oil royalty checks every month, after sitting on their asses?