Cheap oil is good… as long as it pays

According to banking sector analysts, if current circumstances went on, there could be significant incapacity of some shale gas companies to pay back their loans. For instance, Philadelphia-based Atlas Energy currently busy with the ongoing steps of its merger transaction with Targa Resources Corp. Bloomberg news revealed a newly formed unit of this company named New Atlas “put on hold a $155 million loan it was seeking to refinance debt.” According to the Financial Times, junk-bond debt in energy currently amounts to 16% of the $1.3 trillion junk-bond market, up from just 4% back in 2004. From a macroeconomic viewpoint, cheap oil is good for the US, but given the importance of investment in the energy sector within the US economy, further low oil prices could force further consolidation of the sector or even put a number of banks and pension funds at risk.