Medco’s Risk Off: Fundamental or Exogenous Themes at Play?

A blow out in spreads on Medco Energi dollar bonds may not be driven by weaker fundamentals. Credit metrics for the oil and gas producer support its B1 / BB- rating levels with leverage below 3x. At current valuations an upgrade by Moody’s to Ba3 could be a positive catalyst for spreads. Growth ambitions and a track record of debt funded acquisitions on the other hand create a level of event risk going forward. Strong financial management and a successful track record of debt funded acquisition help could help offset any increase in execution or financial risk. Bloomberg Intelligence senior credit analyst Mary Ellen Olson discusses the key drivers in a short video presentation.