S&P places focus on energy merchant liquidity risk

Rating agency Standard & Poor’s is to issue new liquidity adequacy guidelines for US energy merchants, which are particularly vulnerable to large and sudden liquidity demands related to collateral calls.

Speaking at today’s Energy Risk conference in Houston Tobias Hsieh, New York-based director of S&P’s utility, energy and project finance group, said that the rating agency’s new framework for analysing liquidity adequacy focuses on liquidity under a combined stressed scenario that incorporates a negative credit event and an adverse market event.

In particular, S&P believes that investment-grade companies should maintain enough liquidity to address a scenario in which there is a crisis of

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