If WTI Drops To $60, It Will “Trigger A Broader HY Market Default Cycle”, Says Deutsche

Thursday, November 13, 2014
By Paul Martin

by Tyler Durden
ZeroHedge.com
11/13/2014

Suddenly it is not just the shale companies that are starting to look impaired as a result of tumbling energy prices. According to a Deutsche Bank analysis looking at what the “tipping point” for highly levered companies is in “oil price terms”, things start to get really ugly should crude drop another $15 or so per barrell. Its conclusion: “we would expect to see 1/3rd of US energy Bs/CCCs to restructure, which would imply a 15% default rate for overall US HY energy, and a 2.5% contribution to the broad US HY default rate…. A shock of that magnitude could be sufficient to trigger a broader HY market default cycle, if materialized. “

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