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LyondellBasell may be largest-ever bankruptcy

Financial Events, Leverage
By Paul Hodges on 09-Feb-2009

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.