ZeroHedge reported:
European Federation of Energy Traders, a trade body that counts BP, Shell and commodity traders Vitol and the margin-call stricken Trafigura as members, said the industry needed “time-limited emergency liquidity support to ensure that wholesale gas and power markets continued to function”.
“Since the end of February 2022, an already challenging situation has worsened and more [European] energy participants are in [a] position where their ability to source additional liquidity is severely reduced or, in some cases, exhausted,” EFET said in its letter, dated March 8 and sent to market participants and regulators.
It was "not infeasible to foresee . . . generally sound and healthy energy companies . . . unable to access cash", the letter warned, clearly ignoring that "generally sound" companies would have anticipated such a fat tailed scenario.
The world's largest energy trader is Vitol, a partner with The Carlyle Group in Varo Energy.
Some may remember the implosion of Carlyle affiliate SemGroup, a staid pipeline operation that lost over $3 billion in bad energy bets. Energy betting was not mentioned in the company's SEC filings.
Carlyle's credit arm might provide interim capital, but it too could be stressed. Insider reported $12 billion in leased airplanes remain inside Russia. Recent actions by the Russian government puts future lease payments in doubt and constrains the ability of foreign owners to get their planes back.
Aircraft leasing has been a focus for private equity.
According to aviation consultant IBA, the company with the most exposure to the war is Dublin-based AerCap, with 152 planes valued at nearly $2.4 billion that are flying, parked or stored in Russia or Ukraine.
Cerberus Capital once owned Aercap. Carlyle has its own airplane leasing arm:
Carlyle Aviation Partners is the commercial aviation investment and servicing arm of Carlyle’s $66 billion Global Credit platform. It is a multi-strategy aviation investment manager that seeks to capitalize on its extensive technical knowledge, in-depth industry expertise and long-standing presence in the aviation sector. As of September 30, 2021, and excluding the planned acquisition of AMCK’s portfolio, it has total assets under management of $8.3 billion, owns, manages or is committed to purchase 311 aircraft with 106 airline lessees in 56 countries
Carlyle bought Fly Leasing in August 2021. Fly leased one plane each to Russian airlines Nordavia (since renamed Smartavia) and Yakutia. It leased another plane to Air Moldova, not far from the conflict.
As of 12-31-19 Fly Leasing shared the following risk to its operations:
The European Union and the United States have imposed sanctions on Russia and certain businesses, sectors and individuals in Russia, including the airline industry. The European Union and the United States have also suspended the granting of certain types of export licenses to Russia. Russia has imposed its own sanctions on certain individuals in the United States and may impose other sanctions on the United States and the European Union and/or certain businesses or individuals from these regions. We cannot assure you that the current sanctions or any further sanctions imposed by the European Union, the United States or other international interests will not materially adversely affect our business, financial condition and financial results.
It remains to be seen what happens as markets continue to break. The PEU boys have the clout to get direct government bailouts for losing affiliates while scooping up distressed assets with their ample dry powder. In the midst of this the common citizen can't even be heard.
Broken markets include Texas electricity in February 2021, LME nickel trading and now energy traders. The Texas consumer is paying for drastic ERCOT overcharges and will do so for years. LME cancelled thousands of trades to benefit billionaires making bad nickel bets. How will bad energy bets and failed derivatives be passed onto the little people?
Update 3-18-22: WallStreetonParade noted a number of broken markets. JessesCafeAmericain noted the same with "both parties in Washington were united in a belief that the markets would take care of themselves."
Update 3-24-22: Aircraft leasing companies are filing insurance claims for planes taken by Russia. Carlyle has both an airplane leasing affiliate and a reinsurer. Will they settle with themselves? The report indicated "Lessors with asset-backed securities exposed to Russia include Carlyle Aviation Management."
Update 11-5-22: FT reported:
Carlyle Aviation Partners, one of the world’s biggest aircraft leasing operators, is seeking $700mn from more than 30 insurers and reinsurers after they failed to pay out over jet seizures by Russian airlines.
The Carlyle case involves 16 Boeing and seven Airbus aircraft leased to 12 different airlines, according to the court filing. The single biggest group of aircraft is five Boeing aircraft leased to Utair, a regional airline based in western Siberia. Most of the aircraft are in Russia, although one Boeing aircraft operated by Azur Airlines has been detained in Egypt.
