Shipping rapped by Enron paper

摘要

Following the collapse of energy giant Enron, a weak loan market has become more uncertain. After laying off some 25% of its workforce, the company tried to sell assets to raise cash and reduce debts that could total more than $30bn. Citigroup and JPMorgan Chase have debt exposures on Enron of $500m each, and there is talk of Citigroup injecting more cash into the ailing company. Insurance companies such as Citigroup's Travelers, St Paul, Liberty Mutual, AIG and Hartford are biting their nails as they have a combined exposure that could exceed $2bn. Enron dealt with around 10-15 shipping companies on a regular basis. With a large number of the companies' vessels being chartered or involved in bankrupt Enron, they face the risk of loan defaults and potential bankruptcy. According to Enron's shipping director, Pierre Aury, losses in global shipping markets because of the collapse could be as high as $100m. But brokers estimate that Enron's freight futures portfolio exposure alone could exceed more than $100m. With Enron's paper trade comprising 50% of the entire freight derivatives market, many shipping companies face ruin as the company may not be able to fulfil its obligations.