Goldman Sachs Says 40% of Lending to Oil and Gas Firms Is Junk

Dakin Campbell
dakincampbell
February 22, 2016 — 9:32 AM CST
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Bank has $10.6 billion in loans and commitments to the sector
Derivatives, related contracts add an additional $1.9 billion
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Goldman Sachs Group Inc. said about 40 percent of its loans and lending commitments to oil and gas companies are to junk-rated firms.
The figure, which counts both loans made and future promises to lend, accounted for $4.2 billion of a total $10.6 billion as of the end of December, the New York-based bank said Monday in its annual regulatory filing. Goldman Sachs has $1.5 billion in loans to energy companies rated below investment grade and $2.7 billion in unfunded commitments.
The total exposure jumps $1.9 billion counting derivatives and other receivables, which were “primarily” to investment-grade firms, Goldman Sachs said.
Concerns about banks’ energy loans have helped spur share declines for lenders after the price of oil fell 42 percent in the past 12 months through Friday. The Standard & Poor’s 500 Financials Index slumped 13 percent in the same period.
Goldman Sachs’s total is below some of its biggest competitors. Citigroup Inc.’s funded and unfunded commitments amounted to $58 billion, analysts at Susquehanna Financial Group LLP wrote in a note last week. Most of Wells Fargo & Co.’s $17 billion in outstanding energy loans is for companies that aren’t investment grade, Chief Financial Officer John Shrewsberry said last month.

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