Commodity-linked names drift lower as oil prices sink, analysts predict troubled times ahead

By Stephanie N. Rotondo

Phoenix, March 27 – A distressed debt trader said Friday that “commodity-linked guys were all down again.”

Leading the way was the oil and gas space, as oil prices tanked and Moody’s Investors Service said in a report that the sector was now topping its list of junk-rated securities.

For its part, oil prices fell as investors digested data from Baker Hughes indicating that U.S. rig production was stemming its decline.

In the last week, producing rigs dropped by 21 to 813. However, the count had fallen by 41 in the previous week.

On the heels of that report, West Texas Intermediate crude once again dropped below the $50-mark, losing $2.99, or 5.81%, to $48.44 per barrel for May deliveries.

Brent crude declined $3.08, or 5.2%, to $56.11.

In the Moody’s report, the rating agency noted that of the 28 companies added to the junk space, 43% were energy companies. As of March 1, the sector comprised nearly 14% of the list, the highest percentage seen in that sector ever and currently making up the largest industry on the list.

On average, the space tended to make up about 8%, the report said.

Given the weakness in the energy arena, SandRidge Energy Inc.’s 7˝% notes due 2021 ended a point weaker at 63˝.

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