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Worry over bank exposure to commodity traders, Glencore

Oct. 07, 2015 11:46 AM ETXLF, IYF, IYG, VFH, RSPF, UYG, FXO, SEF, FAS, FAZ, RWW, BTO, FINU-OLD, FINZ, FNCLBy: Stephen Alpher, SA News Editor
  • "The $100B gorilla in the room," is the title of a BAML note estimating the global financial system's gross exposure to Glencore. Most looked the other way as this build-up occurred, but the widening in Glencore's bond spreads may have investors pressuring bank managements to boost disclosures and cut exposures, says the analyst team.
  • The $100B figure is an important one given Glencore itself reports adjusted net debt of less than $30B, but total potential exposure (including undrawn lines which tend to get drawn on in times of need) is what's important for banks, and for the Fed, which will administer the CCAR for all the major lenders.
  • ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ

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