Posts tagged 'commodity repo'

Chesapeake’s prepay deals

Some good information is starting to come out about the nature of the liabilities Chesapeake’s CEO Aubrey McClendon managed to saddle the company with.

As the Wall Street Journal reported on Thursday (our emphasis), much of it was positioned off-balance sheet via a type of deal known as a volumetric production payment (VPP): Read more

Re-securitising commodities financing

French banks are stepping back into funding commodities trades, after pulling back on lending last year due to a dollar liquidity shortage.

But this time, it’s securitised. As the FT reportsRead more

Goldman on metal pawning

Remember the negative gold lease rate debacle of the second half of last year?

Negative rates imply that banks are pawning gold in exchange for dollars. A move which happens to depress gold prices. Read more

Collateral crunch, commodity financing edition

Look at any financial market long enough and it starts to resemble the repo market.

Conventional sales and buybacks. Islamic finance. Covered bonds. Commodity contango or backwardation trades. Most of them have some form of sale and later buyback of assets, inbuilt into the trade. The level of the buyback implies a yield-type return, exploiting the market’s current preferences. Read more