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BP CDS Curve Goes Nuts, 1 Year Passes 1,000 Bps, No Offers In Market
The BP Curve has really flipped (out). The 1 year point on the curve is now over 1,000 bps, a 400 bps move in one day. The point is also offerless (bidless in traditional cash jargon). Granted the DV01 so close to 0 is rather low, but this kind of ridiculous curve inversion is simply wreaking havoc on correlation desks. The 6 month point is now 0.5 pts upfront. Pretty soon BP will need to apply for the same ECB bailout that rescued all those banks who were risking a wipe out when Greek spreads were trading at comparable levels. The question now becomes: who sold the bulk of the BP protection? BofA's announcement yesterday that it is limiting counterparty risk exposure with BP to all contracts over 1 year could be a rather material clue as to the identity of at least one such entity.
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Inverted curves FTW
When do we see USTs follow this example?
Wooooo the curve of death!
It'll happen when it happens ZP.
BP is toast.
There might be some political pressure brought to bear here as virtually every British pension relies on BPs dividends.
There has been to date an inordinate amount of pressure placed on the politicians and regulators by BP to comply with BP's wishes in handling everything... including the dissemination of disinformation.
I agree it has a long way to go... remember the Valdez fiasco is taking over 20 years to settle... but that happened in ButtFuck Palinland. This is different... there will soon be screams for blood!
Once you belly up to the BP trough they own you Mr. Obama and Mr. Chief of Staff Rahm (primary kleptocrat fundraiser and BP nipple sucker...) enjoy being the bug underneath the magnifying glass... the sun is coming out soon.
Sorry... I deserved the 'junk'. Alaska is an absolutely beautiful place inhabited by mostly wonderful people... ButtFuck Palinland was clearly out of order... my apologies!
My intent was to contrast population densities in the affected areas!
Helicopter hunting paradise would have drew some +++'s
(i did not junk) but you drew the Junk from the epicures on ZH who saw that you capitalized the "F" and that buzz killed the BP acronym.
Normally I don't miss those opportunities... thanks for keeping me on my toes!
So far you have more junks for your apology than for the original transgression.
That'll teach you. Never complain, never explain, and never ever apologize.
ZerOhead
"I agree it has a long way to go... remember the Valdez fiasco".
It is purported that the Gulf leaks(not a spill) are the equivalent of an Exxon Valdez every other day.
BP-UK is totally different from BP-USA. BP-USA can go bankrupt and the British pensioners wouldn't have to blink an eye. They'd bankrupt BP-USA to protect BP-UK.
Some time this month I would think.
on the order of "this is 6/16...tick...tick....tick....BOOM!"???
This seems like an inevitability now. The mothership survives, but they're going to have to relinquish control of the U.S. operations. That's still a pretty big bite out of corporate equity holders. BP's U.S. operations are more like a pair of legs and lower torso rather than just being one arm of the jolly green giant.
Absolutely, positively, the mothership will be ordered a party to the litigation. We have to differentiate between the concept of limited liability protection and ownership/control. In other words, just because BP may set up an intricate corporate network of "independent" companies, does not mean that it will be absolved of liability if a subsidiary shits the bed.
Further, the venue will be in the U.S. The Judge will have a "judgment" call to make as to whether or not to let the mothership in. My guess is that facts will surface to put the mothership on the hook, e.g. expenses staying with subsidiaries while their profits get "beamed up". Or, at the very least, give the judge the minimum necessary to hang his/her hat on.
This gets tried again and again by multinationals, but they keep getting spanked for it... sometimes they weasel out... but not on this one. Not a chance in a U.S. venue. Impartiality on these type issues is a concept often kept on the shelf, with its neighbors being unicorns and objectivity.
It's also inconsistent to say that BP America makes such a large portion of the BP whole and then deny the mothership will be thrown in... as that is a fact tending to favor including the mothership, as oversight, control, and passing them profits on up are all necessary features. If BP America was an island to itself, fine, keep the mothership out... but we know that probably isn't the case... the mothership will come in.
They should have moved their shares over to Bernie Madoff's fund. Could have gotten the whole concept of THERE IS NO PENSION out of te way early.
ZerOhead
Told ya, 2 weeks ago..............RIG is not responsible for BP.
However, it is a major detriment to allow them to gi under, millions of Brit pensioners depend on their profits, and many U S investors own a shitload of BP stock.
Yup... BP called all the shots... but I knew they would be on the hook a week or two after the blowout... and if you check you will not find a post by me with the letters RIG anywhere... if so please notify! :)
I read BP is thinking about restucturing already... force the bondholders take a haircut. Where have I seen that before. Not a lot of chivalry around when the SHTF.
Cheerio!
I'm amazed it took this long for folks to price BP risk close to reasonable. Maybe the market is just shell-shocked?
A friend of the guy I work for is a west Texas oilman. My boss and this guy were roomates at Texas A&M. The guy told my boss that he was laughing at the ridiculously low price for a great company like BP and, as of last Friday, he was accumulating heavily and smiling about the millions he was about to make.
Maybe the British pensions came to their senses and hedged their risk?
In other news, the bots are trying to get another short squeeze out by falsely pumping the market today.
Cool. Pump it waaay up. I'm hoping for a 500 pt crash going into OPEX.
The stock's gonna get CHEAP!
How about that Swiss goal wow!
Spain V Chile is now a nailed on game not too miss
Stock should be tanking but it's not. I think possibly BP can walk away from U.S. assets and liabilities and keep rest of balance sheet in tact. I am not a lawyer so not true if this is the case. Can't think of any other logical explanation for debt vs equity action last couple days though.
"The question now becomes: who sold the bulk of the BP protection? BofA's announcement yesterday that it is limiting counterparty risk exposure with BP to all contracts over 1 year could be a rather material clue as to the identity of at least one such entity."
Was wondering the same thing. Talk about a black swan. One minute you're writing profitable, if boring credit protection on super-duper-safe high grade BP debt, the next you're dreaming of swimming in a black sea, drowning in red ink.
Do not make the mistake of believing BP will survive this- that's magical thinking. This spill will be etched into the history books as one of the Really Big Fuckups.
It will turn out that the TBTFs have all the CDS exposure here. The u.s. taxpayer will end up footing the bill. They always do. (well, by u.s. taxpayer, I mean cheap chinese money)
Who gives a shit about BP? All I can think about is how fucking HOT Mandy looks today.
CNBC have a problem on their hands with Ms Francis wanting to come back...
Where should Ms Drury be slotted in?
Her own slot between 3-4pm est maybe paired with Simon Hobbs would work the demos...
http://dealbreaker.com/2010/06/larry-kudlow-caught-in-the-middle-of-awkw...
btw, that's a pretty nice 30-minute, 10 point ramp job on the S&P
Phuck 'em. I wouldn't lend them a nickel. If I had any stock I would sell it even if I thought it would go up. I wouldn't piss on them if their hair was on fire.
Just piss on their faces Buzzy... make them beg you to piss on their heads!