Rating Agencies

Chesapeake's AIG Moment: Energy Giant Faces $1 Billion In Collateral Calls

"we have received requests to post approximately $220 million in collateral, of which we have posted approximately $92 million. We have posted the required collateral, primarily in the form of letters of credit and cash, or are otherwise complying with these contractual requests for collateral. We may be requested or required by other counterparties to post additional collateral in an aggregate amount of approximately $698 million."

Citi: "There Was Something About The Entire Recovery Narrative That Is Downright Wrong"

"Far from making the world safer, then, there is a risk that the post-crisis policy mix has simply suppressed problems, making markets stickier, and may even have added to them, by driving the global credit cycle far ahead of the current interest rate cycle. Recent market dislocations are a sign that that stickiness may be reaching breaking point. At this point we may start to question whether it can provide a similar solution this time round, not just because of the zero lower bound, but because the entire premise on which it has been based – inducing credit expansion and risk-taking in some other part of the global economy – seems to be reaching its limits."

S&P Downgrades Glencore To Lowest Investment Grade Rating

Overnight, one of the two rating agencies, Standard and Poors, came one step closer to that fateful moment of junking Glencore when it downgraded Glencore, however it decided to throw the company one last lifeline by keeping it at the very lowest investment grade rating, and instead of cutting it from BBB to single B or CCC where its CDS and bond yield implies the company should be trading, it kept it a BBB-.

Bad Loans Pile Up In Alberta, As Oil Bust Weighs On State Lender

Just in case you needed another reason to fear for the worst in Alberta, Moody’s and DBRS are becoming increasingly concerned about crown corporation ATB Financial. “Alberta's debt situation was under the microscope last week, with [the] two rating agencies taking a look at the province's fiscal situation and economy and not liking what they saw,” CBC reports.

With EMs And SWFs Pushing Markets Lower, Here Are The Three Dramatic Conclusions

Earlier today we showed an amazing schematic courtesy of Citi's Matt King: if one includes the reserve liquidation by various EMs and SWF, and nets it against liquidity injections by DM central banks (and the PBOC), one gets a perfect quantitative, not just qualitative, walk thru on how to trade markets: in other words one can measure, using high frequency data in real-time, just where markets should trade based on liquidity flows and promptly profit from any arbitrage opportunities. But aside from the potential for substantial profits, there are more profound implications. Matt King lays them out as follows..

Moody's Just Put Over Half A Trillion Dollars In Energy Debt On Downgrade Review

Moody's took the global energy sector to the woodshed, placing 175 global oil, gas and mining companies and groups on review for a downgrade due to a prolonged rout in global commodities prices that it says could remain depressed indefinitely. Here are the 69 US, 19 Canadian and 13 European companies (the full list of all global companies can be found here) that just Moody's black list, a grand total of 101 companies which now face a downgrade threat on just about $540 billion in total debt.

Glencore's "Investment Grade" Bonds Just Took Out September Crash Lows: Downgrade To Junk Imminent

Glencore's 2021 bonds just hit a 5 year low, taking out the September crash levels, and trading at about 64 cents on the dollar. Following the recent junking of Noble Group which has sent its stock price to 12 year lows and hitning that a bankruptcy is now virtually inevitable, we expect Glencore to be junked any minute, with the ensuing cascade of margin and collateral calls testing just how "systematically unimportant" the world's largest commodity traders really are.

S&P Enters The Latest European Scandal: Downgrades Poland From A- To BBB+

As so often happens, whenever there is a political spat in Europe, the rating agencies are quickly involved (thing S&P and Moody's downgrades and upgrades of Greece depending on how well the vassal nation is "behaving"), and moments ago S&P downgraded Poland from A- to BBB+ outlook negative, precisely due to Poland's new media law which has been the topic of so much consternation over the past week. In other words, S&P is now nothing more than a lackey for Brussels, threatening to send Polish yields higher if Poland does not fall in line.

Glencore CDS Soar To 6 Year High After Bankruptcy Of US Subsidiary, Ongoing Copper Carnage

The default of Sherwin Alumina, a US subsidiary of Glencore, refocused the market's attention on the one company which in September was among the hardest hit in the post-China devaluation rout, and the immediate result was that while Glencore stock plunged and is once again approaching all time lows, a more ominous development was that GLEN's CDS spiked to as much as 950 basis points, the highest since April 2009 and suggesting far more pain is in store for the commodity trading giant.

Noble Group's "Margin Call" Part II: The Enron Moment

Our balance sheet - the strongest in recent history - represents a significant advantage as we continue to identify high value growth opportunities across the products and geographies we operate in. Maintaining out investment grade rating with the international rating agencies is a vital part of this strategy.

- Noble Group 2014 Annual Report, p. 27