Recent global coverage:
Azerbaijan’s risks are spiralling
Africa: Ghana’s power failure
Middle East: Saudi banks breathe as liquidity fears ease
New Kuwait highlights the same old problems
Despite the halving of the oil price and the fact that 90% of Kuwait’s fiscal revenues come from sales of oil, the emirate is still expected to have a budget surplus this year.
Asia: Singapore banks can’t shake oil services headache
Blighted by souring loans; boosted by wealth management.
Will ETF providers join the Church and save the planet?
Religious organizations are challenging corporations over climate change, while big investors stay mute.
FX: Opec finally reaches deal to cut oil production
After failing to reach agreement at its last two meetings, Opec agreed this week to cut oil output for the first time in eight years. The oil price responded favourably, but lingering doubts about the finer details could mean the impact is short lived.
Price pressures force change in oil and gas treasury strategy
The oil and gas sector has so far avoided making wholesale change to its treasury processes, but as the low price environment continues, firms are now being forced to explore cost cutting.
Mexico: Pemex woes deepen amid oil rout
Country risk: Oil crisis sharpens Nigeria’s investor risks
Energy: PE weighs risks as banks shun oil and gas
Crude oil prices dropped precipitously in the latter part of 2014, raising challenging questions about where they might go in 2015. Undershooting well below a mythical fundamental equilibrium price is a distinct possibility if history is any guide.
What Bluford H Putnam and Lee Thomas said about the falling oil price in 1983.
Oh the markets outside are frightful, but the dollar is so delightful, add oil for a rosy glow, let it flow, let it flow, let it flow.
Some parts of the US market are ‘carnage’; energy bond maturity wall is not due until after 2017.
"At the current price of oil, India will practically eliminate its current-account deficit, for the first time in a decade, which should mitigate pressure on the rupee."
|Sponsored by VTB Capital; December 2014|
There is an elevated risk of a global recession in 2015 given eurozone stagflation, setbacks in Japan, a debt-ridden China, the risk of the oil-price collapse triggering geopolitical risk and diminishing returns from G7 monetary stimulus.
December 2014 euromoney.com
Economists have been downgrading oil exporters’ risk scores in recent weeks, but there might be worse to come if spot prices and petro-currencies continue to fall.
The recent dramatic fall in the crude oil price poses the question: is this just a blip due to temporary fears about global economic growth, or is it the start of a longer-term shift in market dynamics?
December 2014The sovereign’s risk score has fallen in recent days as lower oil prices add to the Kingdom’s existing economic, political and structural weaknesses.
Angola goes after diversification
The fall in the oil price and the de-dollarization of the economy has done even more to highlight Angola’s over-dependence on oil. As a result, the diversification of the economy is higher-up on the government’s agenda than ever before.
Chief executive admits concerns; equity trading planned for 2016.
Like everything else in Nigeria, investment banking will be hit by weak oil prices. Local players may struggle more than their global counterparts.
Commodity price drop will drive NPLs; difficulties could help local capital markets.
Depressed oil prices mean that government revenue in Nigeria is sliding but raising revenue without alienating Nigeria’s most vulnerable will be a difficult feat.
Inspired by the previous government’s agenda, Nigeria’s banks loaded up on loans to local oil and gas companies. The rapid decline in the price of oil has put many of the companies they lent to in distress. Can the banks cope with the potential fall-out?
Peaceful elections in Nigeria herald a new era for the country, but will the elation last while depressed oil prices hold back the country’s development?
The falling oil price has hit oil exporters hard, especially in Africa. But the region has three strengths that should protect its capital markets from the current crisis.
The Angolan government could provide greater financial support to its fledgling $5 billion sovereign wealth fund (SWF), according to its chairman, amid rising concerns over the impact falling oil prices will have on the country's economy.
Executives from Diamond Bank and Carlyle reveal the rationale for the latter's investment in the lender, citing the long-term investment horizon despite the oil-driven volatility in Nigeria’s economy.
Following the global financial crisis, Angola’s economy took another blow and further delayed the opening of the exchange. With heavy reliance on oil exports, the crisis saw prices for Angola’s crude plummet from around $140 per barrel to $60. Unable to pay back loans secured by oil revenue, construction came to a halt. Angola was forced to turn to the IMF for support.
Oil slump raises Venezuela default risk
Sovereign highly exposed to oil price drop; default still not fully priced into bonds.
Parallel FX rate rockets; default more and more likely.
Growth rates revised downwards; investors still 'cautiously’ optimistic.
No short-term response to price shift; fiscal discipline key to economy.
"Mexico is going to be a new player and a strong player and it has tremendous potential. Oil companies are going to be interested in investing in Mexico...But Colombia will remain competitive"
If oil prices remain low for a prolonged period and, simultaneously, Russian companies’ and banks’ access to foreign funding is severely curtailed, "we are likely to see a significant uplift in sovereign and banks’ credit risk."
Russia incentive to implement difficult reforms has an inverse correlation to the oil price, and oil-price surges back to $100-per-barrel levels could further delay fiscal efforts.
Technocrat Bambang Brodjonegoro has plans to turn the country’s state-owned enterprises into regional, if not global, leaders. But the fall in the oil price could quickly scupper his ambitions, unless he can improve Indonesia’s terrible record on tax collection.
The yen has been quietly strengthening in recent days, amid renewed concerns about global demand pushing down the price of oil and fresh fears over Europe. If this trend persists, it could be problematic for Japanese prime minister Shinzo Abe, who is closely associated with a policy of yen weakness.