Goldman Sachs FICC Re-loads Energy TradingGuest Post
Wall Street Journal LIZ HOFFMAN broke down a report about the Goldmanites in talks with Cheniere Energy—to buy a cargo of Liquefied Natural Gas, with the aim to quickly resell it to another buyer, citing sources at the bank.
What was alluded a few weeks earlier by WSJ is indeed confirmed by jacquessimon506.wordpress.com sources in the upper echelons.
It is the deal swaggering the little Houston Texas market-makers world : Goldman Sachs FICC nothing less than reloads the global physical energy platform…
Goldman Sachs & Co Houston-branch:
- fixes a ship for an Asian destination,
- hedges the cargo, and then will try to re-sell to a counterparty- accepting to take the counterparty risk,
- Pricing under the JKM -10.
- (not exactly BTB, but still in an acceptable way for the bank).
We reckon that Goldman Sachs FICC can take a few punts.
U.S Investment banks just received extra time to sell illiquid investments of $6.2 B. “Several big banks have disclosed in their most recent quarterly filings that the Federal Reserve has granted them extra time to sell “illiquid” investments, and none has disclosed greater relief than GS (…)
Goldman is the banker of Cheniere Energy (project finance) and is hedging (via J Aron unit) an important exotic book for the client.
GS is acting in total symbiosis with the counterparty locking steadier revenues through swaps and other contracts for Cheniere.
Finally, LNG trading market-making overlap into Goldman’s traditional FICC <–Sales–> Clients loop, J Aron already warehouses the basis exposure meaning that the bank already takes the risk in-house (some of), continuing to let it grow as opposed to laying off the ‘all-in’ risk.
Goldman has to execute, in a goldmanesque risk-awareness fashion, completely obsessed and focused on execution. Something that we should all related in commodity trading.
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