The rebound in the Energy sector continued once again today as the Philadelphia Oil Services Index rallied 9% for its best day since March 2009.  Today’s rally in that part of the Energy sector followed a strong rally in credit last week where spreads on high yield rated debt of companies in the Energy sector compressed further below 1,000 basis points (bps) to their lowest level since last July.

Spreads060616

While spreads on high yield debt are near their lowest levels in a year, the equities of companies in the sector still have quite a ways to go before recouping all of their losses since last July, when spreads were last at their current levels.  At a current level of 504, the S&P 500 Energy sector still hasn’t taken out its highs from this April and late last year, let alone last July.

Energy Sector 060616 Last 12 Months

 

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