Who are the smartest and most heartless companies in the world? You bet, the banks.
If you recall my article at the beginning of the year, I have explained the real ‘time bomb’ from sharp falling oil price is not just the looming future of the energy companies but the impact to the financial system, the debt system. Fast forward to April now, I am sure the banks have seen it coming.
It was just reported that Offshore firms face tougher access to loans. It said,
Offshore and marine firms are facing a tougher financing environment as banks tighten up on lending amid the energy sector downturn.
The last thing banks want to do is to lend money, unless you’re a very big player or if you can firm up charters before talking to them.
The banks are “placing closer scrutiny on the financial strengths of the borrower or group, given the current climate in the oil and gas sector”
But the funny thing is that “analysts noted that there are no signs of a credit crunch as yet. Assets with contracts or borrowers with solid credit can still secure loans at normal interest rates,”
One thing I learnt from the history of the debt crisis, “solid credit” is a myth. From collapses of Lehman Brothers to Bear Stearns to MF Global, you can see an institution’s credit is always good until it is not.
In fact, things can be pretty obvious but people just don’t see it. It was just reported Schlumberger, the world’s largest oilfield services provider, will eliminate an additional 11,000 positions as a result of tumbling crude prices.
We all know “journalists don’t report if a plane lands safely”, and some times they deny if someone is trying to tell the truth. Reading the news will entertain you but will not fatten your wallet. To make sound investment decisions, you must think out of the box and plan months ahead.
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