Energy Credit Trend No Longer Bondholder’s Friend: 2025 Credit Outlook

After four years of seeing credit spreads grind dramatically tighter, generating market leading returns, energy bond holders may need to prepare for a more challenging world in 2025. Even after some softening since June, credit spreads remain near historically low levels while credit metrics have deteriorated and companies are increasingly focused on stock buybacks and dividends rather than building the business or reinforcing the balance sheet.