Positive Credit Quality. Will the Party Last? What Risks Lie Ahead? Let’s Be Ready.

Over the past 18 months the energy sector has benefited from improving credit quality with rating upgrades exceeding downgrades and more rating outlooks turning positive. We will identify the key drivers of improving credit quality and review the differences between segments (e.g., refining and marketing). However, the industry has been traditionally cyclical and unquestionably risks lie ahead. Some risks though are cyclical (e.g., oil price risk) while others are potentially transformative (e.g., transition/climate risk).  We will break down the 5 largest risks facing the energy sector, discuss how these risks could impact credit quality and offer our suggestions how these risks can be proactively managed.