Banks struggle to unload energy-firm loans as oil prices plunge

Citigroup, Goldman, UBS and others face losses as investors balk at riskiness of energy sector

Citigroup Inc.,Goldman Sachs Group Inc.,UBS AG and other large banks face tens of millions of dollars in losses on loans they made to energy companies last year, a sign of investor jitters in a sector battered by the oil slump.

The banks intended to sell the loans to investors but have struggled to unload them even after cutting prices, thanks to a nine-month-long plunge that has taken Nymex crude futures to their lowest level since 2009.

http://www.wsj.com/articles/banks-struggle-to-unload-oil-loans-1426728583

Oil Bonds Lose Investors $7 Billion in 10 Days

(Bloomberg) — Investors lured back into junk-rated energy bonds by their juicy yields are getting burned.

Oil prices have fallen more than 15 percent since March 4 to a six-year low of $42.3, wiping out $7 billion of market value of high-yield debt issued by energy companies. Prices on $1.45 billion of notes sold less than two weeks ago by Energy XXI Ltd., an oil producer that was being squeezed by its lenders, have fallen by as much as 10 percent. Comstock Resources Inc.’s $700 million of securities have declined by more than 7 percent since March 6.

The latest slump in crude is rekindling concern that oil companies will struggle to service the $120 billion of high-yield, high-risk debt they took on in the past three years amid the U.S. shale boom. That’s a sharp reversal from February when yield-starved bond investors were loading up on the debt again, pushing down borrowing costs to a two-month low.

“We had a whole month where prices were at a level that it seemed to have bottomed and provided a false sense of security for investors,” Jody Lurie, a Philadelphia-based corporate credit analyst at Janney Montgomery Scott LLC, said in a telephone interview. “They are constantly hunting for yield and the short-term opportunity in this low-rate environment.”

http://www.bloomberg.com/news/articles/2015-03-17/energy-junk-bond-revival-cut-short-as-7-billion-lost-in-10-days

Now, with oil prices still in the doldrums, many of those same workers are lucky to be hanging onto their jobs, while others have been booted from the payroll as an ugly wave of layoffs takes hold.

In January, oilfield services giant Baker Hughes (BHI)said it will lay off 7,000 employees, about 11% of its workforce; that number was rivaled only by its competitor, Schlumberger (SLB), which let go 9,000 workers.

Read more at http://investmentwatchblog.com/oil-bonds-lose-investors-7-billion-in-10-days-banks-struggle-to-unload-energy-firm-loans-as-oil-prices-plunge/#hj5PaTX7lmeHGXlh.99