Falling oil price good for Kiwi investors

Oil prices fell dramatically over the second half of last year, from $115 per barrel in the middle of the year to less than $60.

That’s led commentators to suggest looming problems for fixed interest investors who have turned to junk bonds - such as in US shale gas and oil companies - in a search for yield.

At the end of October last year, debt issued by energy firms made up 15% of the Barclays US High Yield Index, compared with 5% in 2004.

Those companies will struggle with the lower oil price and it has been suggested a wave of defaults could have a knock-on effect to the rest of the market.