Tag Archives | leverage

Dow Chemical moves to Plan B

A month ago, after the collapse of the K-Dow deal, the blog suggested that Dow would need to move quickly to a Plan B. It added that “nobody would be very surprised if it now sought to renegotiate the proposed Rohm & Haas acquisition”. This now seems to be underway, judging by two pieces of […]

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INEOS, Georgia Gulf, Chemtura bond prices plunge

Bond markets are a good place to look if you want to understand the outlook for major companies in the chemical industry. A key market is in ‘credit default swaps’ (CDS), which offer insurance against the possibility that a company might default. The way they work is that the owner of a bond, or a […]

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Moody’s worries about the chemical industry

Moody’s, the global ratings agency, is today forecasting a 70% chance of a U-shaped recession, and a 15% chance of either a V or L-shaped downturn. This broadly agrees with the blog’s own view, set out a month ago. Moody’s also singles out the chemical industry as being one of those most at risk from […]

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Soros on leverage

George Soros is one of the most successful investors in recent decades. The blog came across today a report of Soros’ graphic description of the dangers of having too much debt in a business, or personally: “Leverage was like driving along a straight, clear freeway with a sharp spike pointing from the centre of the […]

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‘The price of all assets will go down’

‘Deleveraging’ is an ugly word, and it has ugly implications. Bill Gross of Pimco, who manages the world’s largest bond fund, has done us all a favour by trying to explain its impact, and why it is likely to continue for some time to come. He notes that all financial institutions are now reducing the […]

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INEOS’ Grangemouth plants on strike

Ineos’ 200,000bpd Grangemouth refinery in Scotland is on strike today and tomorrow, over a pension dispute. This will presumably cost the workers 2 days pay. The costs for INEOS and the UK are enormous in comparison. BP, for example, has had to shut down a pipeline that carries 40% of the UK’s oil production, because […]

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‘Too big to rescue’

Readers will know that I am a great admirer of Gillian Tett’s analyses of banking issues in the Financial Times. Today, she has another thought-provoking article, this time on the emergence of Iceland as ‘the world’s first country run like a hedge fund’. The article is worth reading in itself, but also for the question […]

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SABIC – S&P follow Moody’s

S&P have quickly followed Moody’s in putting SABIC Innovative Plastics’ debt on creditwatch for a downgrade. As I commented with the Moody’s downgrade, this is not really to do with a newly discovered decline in the polycarbonate market. S&P have very competent chemical analysts, and must have been aware in August (when the original grade […]

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What next for the credit crunch?

For the chemical industry, much depends on whether the US economy goes into recession during 2008. The signs are not encouraging, with even former Fed Chairman Alan Greenspan believing it is a 50:50 chance. So how would any recession impact the current credit crisis? Writing in the Financial Times their banking editor, Gillian Tett, provides […]

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Moody’s seasonal ‘gift’ for SABIC

Its always interesting to see the news stories that are slipped out just before major public holidays, when media attention is likely to be low. Only ICIS news seemed to spot the announcement by Moody’s that they were placing SABIC Innovative Plastics (the former GE Plastics business) on watch for a potential ratings downgrade. Yet […]

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