Canadian Banks Likely to Cut Credit Lines for Oil Companies

- September 15th, 2015

The Financial Post reported that Canadian energy companies can expect to have a much tougher time gaining access to capital as low oil prices force Canadian banks to cut their credit lines.

The Financial Post reported that Canadian energy companies can expect to have a much tougher time gaining access to capital as low oil prices force Canadian banks to cut their credit lines.
As quoted in the market news:

Low oil prices are expected to force Canadian banks to cut their credit lines for many exploration and production companies by 15 to 20 per cent, analysts at Canaccord Genuity warned.
One reason is because many of the hedges that oil producer have in place are maturing, which means their reserves will be assigned lower valuations.
Much of the oil patch is facing debt facility reviews and renewals, while domestic credit quality remains a primary concern for Canadian bank investors.
There have been no major flare-ups yet, but Canaccord financial services analyst Gabriel Dechaine noted that there was a spike in third-quarter oil and gas loan impairments.
Guidance from banking executives also suggests impairments will likely rise as fall approaches, and more examples are showing up that demonstrate the banks are cutting back on lending to the energy sector.

Click here to read the full Financial Post report.

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