
Give Your Portfolio a Jolt With Energy Bonds

By Tom Graff
About this article:
Many investors are intrigued by relatively high yields available in the corporate bond market. But given the economic backdrop, the fundamental picture with most investment-grade companies is deteriorating.
The energy sector may be an exception. Bond yields for pipeline and exploration companies are enticing, and despite falling energy prices, there is reason to believe the fundamentals of these credits will improve over the next 12 to 18 months. Any improvement in the economy over that time will be icing on the cake.
We know energy prices have been falling. Crude oil is down 66% from its high, natural gas is down 73%. Obviously this isn't great news for energy stocks, but it might not be all bad for bond holders.
High energy prices encourage firms to expand production, spend more on exploration, lay more pipelines, etc. Now with energy prices falling, firms are pulling back dramatically on capex...

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