LyondellBasell may be largest-ever bankruptcy

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The financial fallout from the Lyondell (LBI) bankruptcy continues, as the banks slowly begin to acknowledge their losses.

According to Bloomberg, RBS has taken a $1.47bn hit, Citigroup $1.4bn, and Goldman Sachs $850m. UBS are also believed to have lost at least $500m. But like Bank of America (new owners of Merrill Lynch), they have yet to reveal any details. Nor have hedge fund Apollo, who are believed to have bought $1.9bn of senior debt from Citi last April.

The final losses could be much larger. LBI’s net debt at the time of the deal was reportedly around $22bn. And whilst investors comfort themselves with the hope that LBI’s senior debt (first lien) will eventually be worth over 70c on the $, the current market value is reportedly just 22.6c. In addition, $8bn of more junior debt could well end up worthless.

Update 10 February. UBS disclosed a loss close to $1.2bn.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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