Energy Credit Spreads

There's no need for argument
There's no argument at all
And if you never hear from him
That just means he didn't call
--Van Morrison

Energy credit spreads continue to blow wider--particularly at the high yield (read: junk) end of the spectrum.

Huge declines like we've seen in oil, while good for consumers at the pump, tend to wreak havoc in structured (read: leveraged), finance. Producers, debtors, creditors feel balance sheet stress when underlying collateralized assets drop in value.

As we observed six years ago, when leverage gets high enough and asset prices get low enough, things start blowing up and the dominos start falling.

position in SPX, oil