Oil & gas loan prices climb in tandem with higher oil prices

Secondary market oil and gas loan prices have climbed 137 bps so far this year in tandem with higher oil prices that surprised, jumping almost $11 this year to $71.3 a barrel. Oil and gas loans have rebounded from the lows hit in 2016, when a plunge in crude left oil & gas assets reeling. Currently, the average bid stands at 91.5 cents on the dollar, with only 9% of loans bid below 50, compared to 11% at the end of last year and 22% in June 2016. On the other side of the price scale, 79% of oil & gas loans are bid above 90 cents of the dollar, compared to 72% at the end of 2017 and only 32% in June 2016. Within the sector, the upstream and services subsectors are bid lower on average than midstream and downstream credits. Looking across industries, hotel & gaming, leisure & entertainment, and financial services are bid highest on average, while oil & gas and remains among the lowest in a richly-bid secondary market. In the broader loan market, loan bids have also continued to climb, with the average bid for multi-quote institutional term loans at 98.33 and the flow name SMi100 at 98.56. Despite broader capital market volatility, loans have performed well so far this year. Notably, the par-plus share of loans stands at 72%.