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RIG CDS Market 500/550, +100bps On The Day, All Time Wides
Following yesterday's announcement that the US has asked a federal
judge in Houston to reject a bid by Transocean Ltd. to cap its
liability in the explosion of the Deepwater Horizon and
resulting spill at $27 million, Transocean is literally falling apart. Its CDS level has surged by over 100 bps today, with a market so wide at 500/550 it may need a few HFT quants to narrow it. As we commented yesterday, RIG CDS trading points up front is likely hours away should the news flow not improve. The IG9 name has caught many correlation traders with their pants down and underhedged, and is causing some serious intrinsic rumblings. The same is true for HAL and APC which also are getting punished. BP has temporarily stabilized after a few conflicted sellside analysts had some soothing words for their clients, just so respective prop desks can offload existing inventory into a last minute attempt to prop up the stock price before yet another wipeout.
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To infinity and beyond
How in the hell was the accident RIG's fault??
It was an accident -- just ask Rand Paul. LOL.
From yesterday's thread on RIG:
According to the 60 Minutes piece last week, Transocean (RIG) operators knew they were using a damaged Blow Out Preventer (BOP). The rubber annulus was damaged so there was no way to accurately measure well head pressure therefore no way to know if the hole was properly sealed. Also one of the two controller units on the BOP was inoperative. In addition, the batteries powering the controller units were almost dead. If this corner-cutting damn-the-risk operational mindset represents best the industry has to offer .... "But you’ll never find a finer and more professional team in the oil patch." .... I think I will take a pass on oil & gas explorers/producers.
But living out here in the oil patch, I know that is not the case. There are outfits that do not cut corners and do not take unnecessary risks in an inherently dangerous business.
From what I've heard and read RIG ought to be held criminally negligent. By the time they are through with all the litigation the civil judgments may be catastrophic for the company. Since RIG materially contributed to the destruction of an entire ecosystem any judgements rendered against them will be grossly inadequate compared to the crime they committed. What is the appropriate punishment for eco-terrorism?
http://www.zerohedge.com/article/buy-transocean-while-lynch-mob-baying-blood
Moin from Germany,
via Felix Salmon two Cramer classics.... After the spill Cramer advises to buy BP close to 50....
The second time he buys it close to 50 for his "trust" ( ?) portfolio
The best part is the unrelated buy recommendation for a homebuilder...... SPF has managed to underperform even BP.....
http://www.cnbc.com/id/36919660/Cramer_Gulf_Spill_Won_t_Break_BP
http://www.cnbc.com/id/37063610/Mad_Mail_Is_BP_Still_Buyable
You really cannot make this up.....
Phantom headline from Bloomberg.com:
Treasury's Note, Bond Sale Amount May Drop Most Since Crisis, Dealers Say
Links to blank page. Timmay and Benny ramp job is a work in progress, I guess.
Perhaps a little premature, but I took a hedged long position in RIG yesterday. Even if their liability ceiling is raised/expanded we are talking about a company with $3B in annual earnings and it sounds like they have a pretty solid legal defense on their side.
You're going to feel more pain. RIG may drop to $20.
That may very well be true, but RIG seems like a much likelier takeover target compared to BP. Especially in the $20s. I will be aggresively accumulating at those levels.
MM
What happens when the feds nationalize it's assets to pay for the cleanup? EPA Estimates for cleanup over 1T$.
Glad I didnt listen to MHFT yesterday!
To give MHFT his props...he said "buy when there is blood in the water". Now?...it is only oil and dead animals. Too soon to buy RIG.
As well I wonder how confident the Brazilians are these days drilling in the Atlantic? The GoM is a picnic compared to those waters.
On another blog, commenter says RIG is domiciled in Switzerland, has huge backlog outside of US, and limited contractual liability--i.e. the buy of a lifetime.
I was under the impression that the Blow Out Preventer was operated by Cameron Int'l, not RIG.
Is something looking bullish ?
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1