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BP Net CDS Hits Another Record, As APC Weekly Change Is Flat, Implying BP-APC Pair Trade Overhyped
According to DTCC, BP net notional CDS has hit another weekly record, coming in at $1.794 billion on 2,590 contracts as of June 18. This is a change from past week's $1.677 billion net notional outstanding, and 2,072 contracts: an increase of $117 million in net notional derisking as an increasing number of bets on BP's bankruptcy are made. Another very popular name, Anadarko, came in at $1.630 billion net with 3,051 contracts: the exact same notional as the prior week (which however saw 2,877 contracts outstanding). In other words, even as traders derisked in BP, they were flat in Anadarko, implying that a short risk BP - long risk APC trade was not being actively put on in the past week, contrary to media reports of this being a prevalent pair trade. Instead speculators took on unhedged short risk exclusively in BP. Alternatively, we could see accelerated derisking in APC soon as the long risk leg of a possible BP-APC pair trade catches up with FV.
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so short BP vs. APC
credittrader [ever so informative] pointed to me that the pairs trade was/is being done with BPs stock vs spread. Which [if you entered early] would net you a substantial return.
MSM; as always, proves its idiocy.
That was before all those who entered the cap structure arb got blown out on the inversion of the cash cds basis. Now it is all coin flipping.
Be careful who you short...
Next up in the ultradeep water oil is the massive "FPSO Kwame Nkrumah", a brand new and much larger rig than the Deepwater Horizon.
http://www.modernghana.com/news/280923/1/fpso-kwame-nkrumah-expected-in-ghana-next-week.html
"West Tano jubilee field, Ghana, West Africa. 1 - 2 billion barrels"
The Jubilee Field is the name given the oil field of Ghana, where first commercial oil is expected in the last quarter of this year. The Jubilee Field Unit is situated in Deepwater Tano (DT) and West Cape Three Points (WCTP) blocks, approximately 60km offshore Ghana and 130km west southwest of the port city of Takoradi.
Tullow Oil operated the Deepwater Tano block, where it held 49.95% interest, with Kosmos and Anadarko holding 18% interest each. Sabre Oil & Gas held 4.05%, whilst GNPC had a 10% carried interest. However, GNPC exercised its option of taking up additional paying interest following a discovery, and increased its stake to 15%.
On the other hand, Kosmos Energy was the Operator of the WCTP block, in which it held 30.875% interest, just like Anadarko Petroleum, while Tullow Oil held 22.896% interest. The other partners in that field were the EO Group, which held 3.5%, Sabre Oil & Gas, 1.854% and GNPC having a carried interest of 10%. Here again, GNPC took up additional interest of 2.5%, to increase its stake to 12.5%.
http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=181959
The Brits have landed in Takoradi, Ghana.
http://www.youtube.com/watch?v=XKJ1gT-bkCk&playnext_from=TL&videos=u6SwbV2Aszo
http://www.youtube.com/watch?v=mSv9Ig9nE50&playnext_from=TL&videos=FVgTw-wy6hk
Tullow Oil
LONDON, March 2 (Reuters) - Shares in London-based explorer Tullow Oil (TLW.L) jumped 3 percent on rumours that oil major BP Plc (BP.L) was planning a 15 pounds/share bid, though BP's Chief Executive played down talk of acquisitions. Dealers said the rumours circulated through the day, and Tullow shares, which had been trading up 0.2 percent, jumped 3 percent after the rumours were reported on a news agency.
BP and Tullow declined comment, but when asked about takeovers on a conference call with analysts, BP CEO Tony Hayward said if BP was to make acquisitions it was likely to be of oil fields rather than companies.
Kosmos Energy
BP could outbid Exxon Mobil for Kosmos Energy's Ghanaian oil field.
Exxon Mobil's bid for $4bn (£2.4bn) of prize oil fields in West Africa appeared under threat of competition last night, following reports that BP could put in a higher offer with Ghana National Petroleum Corp.
BP may now have hired Goldman Sachs to look into making a counter bid for the field, according to a report by Bloomberg News.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/6411488/BP-could-outbid-Exxon-Mobil-for-Kosmos-Energys-Ghanaian-oil-field.html
I have my calls on bp, just like a euro short, relief rallies occur for no good reason :-)
this is interesting as it gives us a window into credit CDS. BP has limited debt on offer now, but may have a lot more in future. On the one hand we can see that the existing bond holders probably aren't insuring BP debt via CDS, so the activity in CDS must be at least part naked for "present" debt, but not arguably for "future" debt. On the other BP must be wondering whether it can insure the cost of its future debt issuance also for say $50 billion, hence its borrowing costs can be known now and it can mitigate the cost of its borrowing with profit it makes by "trashing" its own spreads. hmmm
Completely off topic but I just stumbled across some video of Obama talking to his staff about those diplomatic cables Wiki Leaks supposedly has in their possession and ready to use to expose and embarrass the USA.
Have fun. The Atari reference is sooooooo Tyler.
http://www.youtube.com/watch?v=P_k7WPv2EvY
you guys are laughable, 100mio CDS on BP is a drop in the Atlantic. You MUST have something better to do?
This is what BP is going to do. They are going to bankrupt BP America in the US without even touching the parent Brit company. BP as a multnational company will continue on without a break. The victims in the Gulf will get none of the promised $20 billion. Under international law, not much the US gov't can do.
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