From Bloomberg
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Asset manager building a team to focus on energy sector
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“A core financing need that banks are unable to fulfill”
The $460 billion asset manager is building up a team in its fixed-income business that invests in oil and gas companies. It will make loans, buy bonds, and take equity stakes. The company has hired Daniel Posner, a veteran distressed-debt money manager, to lead the team along with Petter Stensland, a high-yield credit analyst at the firm.
“Capital is truly dear and the sector has gone much further through a challenging environment,” said Ashish Shah, head of fixed income at AB. “There is a core financing need that banks are unable to fulfill and we think we can provide that capital solution.”
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The banks’ retreat, combined with a jump in oil prices in recent weeks, has enticed at least some investors to increase their exposure to energy companies. AB’s credit team is the latest example of the “shadow banking system” ramping up while traditional bank lenders pull back.
The U.S. shale boom earlier this decade was fueled by junk debt. Companies spent more on drilling than they earned selling oil and gas, plugging the difference with bonds and loans.
Those loans and bonds are now a millstone for many banks and other lenders, a turn that regulators are paying close attention to. According to a report from bank examiners including the Federal Reserve in November, credits related to energy companies were increasingly weak.