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S&P warns on debt-laden companies

Ratings agencies Moody’s and S&P started taking a heavy line with Sabic in December over the supposed decline in the business environment at Sabic Innovative Plastics (the former GE Plastics business). This caused me to speculate that they were preparing the ground for a more wide-ranging move. Today’s S&P report on private equity owned companies […]

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UK banks follow US lead in tightening credit

The Bank of England’s quarterly survey of corporate credit conditions, published today, shows that companies are finding it harder to get credit, and that rates are rising. This is in spite of the massive liquidity injections made by the Bank over the past 6 months, and its 0.5% interest rate cut. The Bank says that […]

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‘Don’t panic’ say Dow, BASF

Its not normally a good sign when chemical industry bosses feel the need to cheerlead on the outlook for the economy. Dow’s CEO Andrew Liveris therefore caught my attention at Davos, when he told CNBC that talk of recession was ‘over-reaction’. Particularly when he then corrected himself, adding that what he had meant to say […]

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US banks tighten as the Fed eases

The US Fed has dramatically cut interest rates by 1.25% recently. But as it eases, so US banks seem to be tightening their lending criteria for mortgages. Present standards are the tightest recorded Since 1990, the Fed has asked banks about their lending standards. The chart above (by Merrill Lynch) shows the results. From 1992-2006, […]

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The renminbi keeps rising

I noted last month that China seemed to have changed policy with regard to the renminbi. Since then, its rise versus the US$ has accelerated, as shown in the above chart from Merrill Lynch (ML). Since August, it has been rising at an annualised rate of 13%. ML’s explanation is that the government is having […]

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Wal-Mart sales ‘below expectations’

‘‘I despair at times at why the equity markets can’t see how serious the credit crunch is’, said one senior credit analyst at an investment bank. ‘They just trade off the day-to-day newsflow’. This interview from yesterday’s Financial Times reminds me of last July, when I noted how financial markets seemed to have become divorced […]

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60 is the new 40 for BP

Very few non-OPEC oil projects have been financed in recent years, although market prices have risen from $20/bbl to $100/bbl. This is because oil companies and banks assumed that current prices would fall back to $40/bbl, or even lower, within 3 – 5 years. But a new reality has been dawning, summed up by Total’s […]

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Dow, Basell, BASF, SABIC owed $5m in Plastech bankruptcy

Chemical companies tend to trade on ‘open book’ terms with long-established customers. They are also supportive when those customers are facing problems in their end-markets. In a recession, these admirable qualities can become expensive. ICIS news reports tonight that the bankruptcy of Plastech Engineered Products in the US has led to debts of nearly $5m […]

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OPEC holds quotas, rebuffs Bush

OPEC’s decision to hold its production quota at last Friday’s meeting came as no surprise to the markets, which were busy taking prices down $2/bbl on renewed fears of a US recession. But it did produce a warning from the International Energy Agency (IEA) that OPEC’s policies ‘threaten the strength of the global economy’. The […]

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US housing, China storms hit chemical demand

Andrew Liveris, Dow’s CEO, commented today that Dow now have ‘a total clampdown on costs and capital expenditure’. Whilst other CEO’s told the Financial Times that ‘rising oil prices, sagging consumer confidence and the on-going credit crunch’ are causing them to put in place ‘contingency plans to protect against the expected economic downturn’. Separately, Bill […]

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