http://sg-stock.blogspot.com/2020/03/weve-correctly-predicted-end-of-good-us_11.html
The first batch of firms to get downgraded will be those shale oil producers and many of their debts are packaged into high yield bonds, a.k.a junk bonds. Therefore, there will be a huge selloff of junk bonds soon.
Russia and Saudi are adamant to slaughter the US shale oil producers and will keep oil prices low for a considerable period for the US shale oil producers to collapse. However, both these 2 countries need to maintain and fund their budget shortfalls so that their own economies won't suffer.
As a consequence, I expect Russia, Saudi Arabia and Norway to sell off their assets under their state-owned oil sovereign wealth funds to fund their own economic growth during this economic malaise.
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2 comments:
The US shale oil break-even price is around US$50.
Russia's economic budget is based on the break-even price of US$42.
Saudi's economic budget is based on the break-even price of US$75.
Therefore, Russia has the most leveraged in this oil war against the US.
https://sg.finance.yahoo.com/news/high-yield-u-bonds-suffer-164045672.html
Junk bonds have started to fall as I expected.
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