Antipodes Portfolio Manager, Chris Connolly speaks to The Australian Financial Review about plunging oil prices.
“You will start to see some pretty meaningful bankruptcies with those stresses spilling over into other parts of credit markets,” said Chris Connolly, a portfolio manager at Antipodes Partners.
There’s $US320 billion ($489 billion) of high-yield oil and gas debt – $US280 billion of bonds and $US45 billion of high yield loans – on issue in the US.
Russia and Saudi Arabia are the lowest-cost energy producers, and the world hasn’t added much incremental production over the past decade outside of shale.
“If you’re taking a 10-, 20-year perspective they can’t really afford to cede more market share to the US shale producers,” Mr Connolly said.
“We believe in a low carbon future but over the next decade we don’t believe oil demand will fall, however we do anticipate a pretty significant shortfall of supply.”