Energy XXI Ltd fka EXXIQ

[DocLevi]

Standard & Poor’s keeps a list of the number of “weakest link” companies globally — those rated B- or worse and with negative outlooks. Of the 13 new entrants in March, seven were in the oil and gas sector. Of the 157 “weakest link” companies monitored by the agency, 13 per cent are from the energy industry.

They include Texas-focused Sabine Oil & Gas; Energy XXI, an independent Gulf of Mexico producer; and oil equipment manufacturer Permian Holdings.

The dangers stalking the industry are already reflected in the price of US energy junk bonds, which remain in depressed territory despite the recent rally.

The current average yield of 8.8 per cent compares with 6.6 per cent for the wider Barclays high yield bond index. Stripping out the energy sector and the average yield of debts in the gauge falls to 5.7 per cent. Potential returns in safer, more highly-rated debt are even scarcer. The overall Barclays Aggregate index — the “Agg” that acts as a benchmark for many bond investors — yields only 2 per cent.

http://www.ft.com/cms/s/2/96a16d7a-dcf9-11e4-a772-00144feab7de.html#axzz3X8yG46mv