Oil & Gas: Looser structures, longer tenors

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19 May 2010

Michele Martensen assesses how banks involved in the oil and gas sector are responding to calls for looser structures and longer tenors.

This article appears in the May print edition of Trade Finance under the headline: All dressed up and nowhere to go.

Deal closures in the first quarter of 2010 were limited in the energy sector. Margins are already coming down for the big names, fuelled by a flight to quality and the fact that other sectors, such as metals, are still dealing with the aftermath of the restructuring wave. Banks still have to make their budgets though. And the expectation is that transactions not yet visible to the market, but which banks have spent the first quarter preparing, will lead to a higher deal-flow in the second quarter.

In a bid to preserve as much cash as possible and to keep operations going post-crisis, energy companies – upstream oil and gas companies in particular – have been dramatically cutting non-discretionary capex and acquisitions over the past twelve months. This big...

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