The recent dramatic fall in share prices of independent E&P companies on the back of plummeting oil prices has been well documented - but what has gone under reported is the sharp fall in bond prices as well.
Unique to this cycle, many of the bonds that have been issued by independent E&P companies over the past few years have been on markets where retail investors can invest directly in securities which have traditionally be the preserve of institutional investors.
With bonds in well-known E&P names trading at yields more resembling equity returns (15-35%!) we attempt to ask “has the market got it right?” with regard to the pricing of these bonds and point out situations where potential pricing ‘anomalies’ may exist in the current cyclical downturn.