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Mixed year for corporate bond sales
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Tag >> energy
Sep 27

Commodity traders gone wild

Posted by dbedell in volatilitysupply chainNicolas Sarkozyhedgingexportsenergycurrency volatilityCommodity Futures Trading CommissioncommoditiesChristine Lagardeagriculture


 With French president Nicolas Sarkozy set to take over the G-20 leadership in November, he and French Finance Minister Christine Lagarde are clearly focused on an overhaul of commodities speculation practices in major developed economies.

On Monday, Lagarde reiterated this message in an interview on Europe 1 radio, calling on G-20 leaders to coordinate efforts to reduce speculation on commodities and currencies in order to better manage the extreme volatility seen in recent months—and indeed to reduce the wave of highs and lows that often drive these markets.

Aug 12

China’s closures will affect growth

Posted by dbedell in growthenergy intensityenergyeconomyChinaCash


China may be talking the talk of meeting energy reduction targets, but whether they will walk the walk long term remains to be seen.

And the impact of their energy reduction plan--to shut down 2,000 high-energy-use factories in heavy industries across the country--could have a big impact on the companies being targeted. Certainly a failure to comply will have a big effect.

Jul 27

Time to reread Keynes

Posted by Ron F in recoveryrecessionObama Administrationjobsjoblessnessinvestmentfinancial crisisenvironmental policyenergyemploymenteconomydemandCongressCareers/Management

Ron F

I've avoided rehearsing the on-going debate over the bleak macroeconomic picture, because it quickly descends into endless political back and forth along with the usual name-calling, as my colleague Steve Taub and I have been discussing internally today.  But it's time to make an exception:

Is the private sector not hiring because it fears more aggressive action from the public sector, and so the public sector (read Obama administration) should leave the economy to itself, as those on the right claim? Or is the lack of private sector hiring a reflection of a lack of private sector hiring, and thus a vicious circle and market failure that requires the public sector (read Obama administration) to step in with a serious jobs program involving infrastructure, alternative energy and schools, as those on the left insist?

Not to speak for Steve, but my sense is he tends to agree with the first perspective, at least for the most part, and I can safely report that I agree with the second, and would recommend James Surowiecki's recent column to help make my case if I could find it. Since I can't, suffice it to say Surowiecki made the useful observation that the two sectors where hiring is picking up, banking and health care, are those where the government has taken the most aggressive regulatory action.

Jun 24

Ethanol production gaining energy efficiency

Posted by Karen1 in USDAethanolenergy


Even as oil continues to gush within the Gulf of Mexico, work proceeds on alternative forms of energy. Earlier this week, the USDA released a report showing that the net energy gained in converting corn to ethanol has continued to improve. Ethanol, which was a net energy "sink" as recently as the 1990s - that is, it required more energy to create ethanol than ultimately could be delivered from the ethanol itself - now has a substantially positive energy gain in the latest study.   

To determine ethanol's energy efficiency, the report authors examined the fossil fuel energy needed to produce corn-based ethanol. They found that one British Thermal Unit (BTU) of energy used in the production of corn-based ethanol  generated about 2.3 BTUs of ethanol.  

Driving the improved efficiency are refinements in ethanol technology, as well as boosts in corn yields. For instance, while 65,285 BTUs of energy were needed to produce one bushel of corn in 1996, 41,029 were required in 2005. "Energy use on farms is declining," says Hosein Shapouri, agricultural economist with the USDA, and one of the study authors. At the same time, the average number of bushels of corn per acre jumped from 122 in 1991 to 160 in 2005. 

Jun 01

China acquisitions of foreign companies reach new record

Posted by mcole in protectionismmergerglobal economyenergyDealsChinaCashacquisitions


China has increased its appetite for foreign companies.

Outbound acquisitions by Chinese companies have swelled five times to $28.4 billion so far this year (as of May 24) compared with $5.8 billion during the same period last year, according to Thomson Reuters.

Feb 16

Andrew Hall's conflict of interest looks much like Andy Fastow's

Posted by Ron F in TradingRegulationObama AdministrationEnronenergycomplianceCitigroupCFOBanksBanking

Ron F

Does anybody else have problems with the fact that the head of the energy trading unit that Citigroup sold to Occidental last year is setting up a hedge fund?

It would be an entirely different situation if Andrew Hall were leaving Occidental to do this, but he isn't. Instead, he will wear both hats simultaneously.

Dec 15

Exxon's announced deal already boosts XTO's credit

Posted by mcole in mergers and acquisitionsenergydebtCredit Ratingscredit default swapCreditacquisitions

The acquisition of XTO Energy announced Monday by Exxon Mobil shows once again that cash is king. The deal is already boosting XTO's credit profile, yet won't damage Exxon's, thanks to the latter's cash reserves.

Exxon plans to buy XTO for $41 billion, including the assumption of $10.2 billion of debt. The deal, which will be financed purely with stock, will strengthen Exxon's natural gas production business.

Spreads on XTO's bonds tightened from 128 basis points over Treasuries to about 60 basis points on Monday, according to Dow Jones Newswires.

"With Exxon one of the four U.S. non-financial companies carrying the top credit rating of triple-A, and with XTO bonds rated toward the bottom of the investment-grade ladder, the news was a boon to XTO bond holders," the story noted. That means debt will become a lot cheaper for XTO, which is already trading like a triple-A company in the credit default swap market.

Yet Exxon can easily afford the doubling of its debt load, to close to $20 billion, as a result of the deal. "When measured against large cash reserves of approximately $12.5 billion, the combined entity's pro forma net debt is low on an absolute basis at just $7.34 billion," noted Fitch Ratings in a press release.

Fitch anticipates that the company will continue to be managed conservatively and will maintain high levels of financial flexibility post integration, allowing it to preserve its AAA rating. 

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