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Norway Junk Bond investors losing hope as oil Squeeze deepens

Norway Junk Bond investors losing hope as oil Squeeze deepens

OSLO: Investors are losing hope in the Norwegian high-yield debt market, according to DNB ASA, the nation’s biggest bank.

A renewed crude plunge has once again ratcheted up risks in market and the longer the situation lasts the “more investors lose hope that companies will be able to serve their debt,” Magnus Vie Sundal, credit analyst at DNB, said in a phone interview Tuesday.

There are “too many rigs and ships compared with demand from oil companies,” he said. “And with this overcapacity comes large debt burdens for oil service providers, for many, too high relative to earnings.”

The Norwegian junk bond market came to a standstill last year as crude prices collapsed. After a slow pick-up in the first half of the year, energy bonds again plunged in August as oil prices reached six-year lows. The DNB High-Yield Norway Total Return Hedged Index fell 4 percent in August.