The Bloomberg Barclays High Yield Energy Total Return Index was up 0.77%, marking its highest gain in two years since the Organization of the Petroleum Exporting Companies (OPEC) agreed to reduce supply for the first time in eight years on Nov. 30, 2016.
The bond move also saw Brent and crude oil tick higher as much as 2% ahead of the OPEC meeting on Thursday to discuss output as well as future strategy with oil producers outside of OPEC, such as Russia.
The gain in oil and high-yield energy bonds also came on the tailwinds of this past weekend’s G-20 Summit meeting between U.S. President Donald Trump and Chinese president Xi Jinping agreeing to stop further tariffs for 90 days while negotiating a permanent trade deal.
“The market seems positively oriented following the G-20 developments and heading into the OPEC meeting on Thursday,” said BNP Paribas commodities strategist Harry Tchilinguirian.
CCC-rated energy debt climbed its highest in two years on Monday ahead of the OPEC meeting.
High-Yield ETF Options to Consider
With high yield energy bonds gaining, some high-yield ETF options to consider include the iShares iBoxx High Yield Corp Bond ETF (NYSEArca: HYG), SPDR Bloomberg Barclays Short Term High Yield Bond ETF (NYSEArca: SJNK) and iShares 0-5 Year High Yield Corporate Bond ETF (NYSEArca: SHYG).
HYG tracks the investment results of the Markit iBoxx® USD Liquid High Yield Index, which is comprised of high yield U.S. corporate bonds that have less than investment-grade quality. Investors who have been able to forego the credit risk have seen total returns of 4.92% the last three years based on Yahoo! Finance performance figures.