DOUBLE LEVERAGE?

Oil prices are down about $30 from their highs; great news for consumers and the big oil importers (China, Korea, India). Not so good news for the big producers (Saudi, Russia, Venezuela).

Oil companies have been borrowing more, but most of the major multinationals have very strong balance sheets and generate a great deal of cash. But the biggest oil companies in the world are state-owned, and they have been especially thirsty for debt. The Latin American giants stand-out:

• Petrobras has $147 billion of sales and $123 billion of debt
• PDVSA has $127 billion of sales and $120 billion of debt
• Pemex has $127 billion of sales and $134 billion of debt

So not only are these companies levered to the price oil, they are levered to interest rates as well. Double down?

• 7 Aug, 2023

  Satisfaction

  Why does the Fed insist that low unemployment drives higher inflation? Policymakers' imagination is being fired by ...

• 27 May, 2020

  Sunrise or Sunset: Thoughts on a Post-Pandemic World (Part 1)

  Two and a half months of isolation engenders reflection, on what weve endured, and contemplation on what the future may ...

• 11 Nov, 2014

  How The Mighty Fall

  Between March 2000 and October 2002, the NASDAQ Index fell 75%, from over 5,000 to under 1,300. Of course, valuations ...