Monday 23 October 2017

HSBC and World Bank both nursing Petroceltic losses

Petroceltic operation in Algeria
Petroceltic operation in Algeria

Donal Griffin

HSBC and the World Bank sold out of their Petroceltic senior loan stakes at 30 cent in the euro, it is understood.

The lenders, including HSBC which once touted its relationship with Petroceltic, sold the loans to Worldview, the activist shareholder vying for control of the listed oil company.

Europe's lenders face significant losses on loans made to the oil and gas sector.

Many are to industry giants that can ride out the slump, but that leaves $113bn in lending to minnows, wildcatters and other junk-rated companies, Bank of America analysts wrote last month.

"A lot of these smaller, independent companies are really stressed under the current oil price," said Victoria McCulloch, an energy analyst with Royal Bank of Canada. "This year is going to be tough for the banks that lent to them."

Petroceltic applied for Examinership in Dublin this month. Worldview, which has been fighting for control of the business since 2014, purchased the majority of its $233m of outstanding debts the next day from HSBC and the International Finance Corp, a branch of the World Bank, sources said.

Worldview, controlled by a Bulgarian ex-Deutsche Bank proprietary trader named Angelo Moskov, paid about 30 cents on the dollar for the loans, inflicting losses of about $112m on lead lender HSBC and IFC, according to the people.

Sarah Marquer, a spokeswoman for HSBC, declined to comment on the sale of loans.

Petroceltic's Examinership application, seeking creditor protection, made prospects of repaying loans "even more uncertain" and selling out to Worldview was in the IFC's best interests, Frederick Jones, a spokesman in Washington said.

Spokesmen for Worldview and Petroceltic declined to comment. (Bloomberg)

Irish Independent

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