‘No way to properly’ short bitcoin bubble, expert warns

Bitcoin’s value rose to more than $17,000 before dipping. (Reuters)
Updated 12 December 2017
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‘No way to properly’ short bitcoin bubble, expert warns

LONDON: Nassim Nicholas Taleb, an academic and expert on the derivatives market, has tweeted a warning about using future contracts to hedge the rising price of bitcoin.
In a Tweet dated Dec. 9, he said: “… there is NO way to properly short the bitcoin ‘bubble’.”
His tweet went out just before the virtual currency began trading on the Chicago Board Options Exchange (CBOE) on Sunday night, a move which will allow investors to bet on the direction of bitcoin ­prices.
“Any strategy that doesn’t entail options is nonergodic (subjected to blowup). Just as one couldn’t rule out 5K, then 10K, one can’t rule out 100K,” Taleb said within the same tweet. The bitcoin securities will track the price of virtual currency as quoted on Gemini, a large bitcoin exchange.
Taleb has around 228,000 followers, and is known for predicting Black Swan events, including forecasting the 2008 crisis and the outcome of the 2016 US presidential ­election.
In a later tweet, he wrote: “Note that bitcoin has a limited number of natural sellers. The entire concept is very concave supply (it costs more and more to extract). The number of producers shrinks with time.”
Following the launch on the CBOE, bitcoin is expected to be listed on the Chicago Mercantile Exchange by the end of the month.
The listing of bitcoin on exchanges is seen by some as an attempt to legitimize the cryptocurrency, as well as make it easier for people active in conventional investment banking to buy the asset.
In the run-up to the launch, bitcoin’s value rose to more than $17,000 before dipping.
The opening price for the bitcoin futures was $15,000, according the CBOE statement. Over the past five years, the total value of all outstanding bitcoin has grown from less than $1 billion to more than $262 billion as of Dec. 8, according to the statement.
The total value of all cryptocurrency tokens stands at approximately $423.7 billion, the statement said.
Bitcoin has gained in popularity in recent years as a currency that is not tied to a bank or government, enabling people to spend money anonymously.


SABIC prepares to meet investors to offer bond

Updated 25 September 2018
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SABIC prepares to meet investors to offer bond

  • The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25
  • SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale

LONDON: Saudi Basic Industries Corp. (SABIC) is preparing to offer its dollar-denominated unsecured bond to the global market with investor meetings due to start this week.
The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25, according to a filing on the Saudi stock exchange on Tuesday.
The Saudi company is likely to be keen to tap into the heightened international interest in the Kingdom’s financial markets following the lifting of some restrictions on foreign investors’ activities at the start of the year.
SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale, alongside HSBC Bank, Mitsubishi UFG Securities EMEA and Standard Chartered Bank acting as joint lead managers, in its Tadawul note.
The proposed issuance has been well-received so far by analysts with ratings agency Moody’s Investor Service assigning an ‘A1’ rating to the proposed senior unsecured notes to be issued by the financial vehicle, referred to as SABIC Capital II, and guaranteed by SABIC itself.
“SABIC’s A1 rating reflects its strong business position in the chemical sector and its ability to weather industry volatility, particularly given its healthy operational cash flows and conservative liquidity profile,” said Rehan Akbar, a senior analyst at Moody’s, in a note on Monday.

 

The bond is anticipated to be used in part to refinance an existing SR11.3 billion ($3 billion) one-year bridge loan raised in January this year to fund the company’s 24.99 percent stake in the Swiss chemical company Clariant, according to the Moody’s note. All regulatory requirements were completed on this acquisition earlier this month.
Cash proceeds from the bond may also be used to repay a $1 billion bond due on Oct. 3, according to Moody’s.
On Tuesday SABIC confirmed that the bond will be used mainly to refinance “outstanding financial obligations” of the company and its subsidiaries.
Analysts at rating agency S&P Global were also upbeat about SABIC’s outlook, with research published on Monday stating that the company has “strong profitability” via its KSA operations and a “strong” liquidity position.
“The debt issuance is helpful for the credit profile in the sense that it extends the company’s debt maturity profile and strengthens its liquidity position,” said Tommy Trask, corporate and infrastructure credit analyst at S&P Global.
The agency currently assigns the petrochemical firm an ‘A Minus’ rating, with a “stable outlook,” which it said reflects its “view on the sovereign as well as its expectations that SABIC will maintain high profitability under current benign industry conditions.”
S&P Global’s report said margins in the global chemical industry will “largely stabilize in 2018 following several years of improvement, attributable to the increase in commodity chemical capacity.”
However, it also warned that a key risk to credit quality is
the trend for mergers and acquisitions within the sector and the “potential negative impact on credit metrics from funding them with debt.”

FACTOID

SABIC operates in more than 50 countries across the world.