Goldman Sachs cut exposure to oil and gas companies last quarter

[NEW YORK] Goldman Sachs Group Inc went short oil and gas companies last quarter, bringing its total exposure to the industry below US$12 billion for the first time since it started breaking out that risk to investors at the end of last year.

The firm's market exposure to oil and gas companies was negative US$243 million at the end of September, compared with US$482 million three months earlier and US$805 million at the end of 2014, the New York-based company said a regulatory filing Tuesday. The bank had US$12.2 billion of credit exposure to the industry, with US$10.3 billion coming from lending and US$1.9 billion from derivatives and other receivables.

Oil tumbled 41 per cent in the past year, dragging stock prices of companies in that industry along with it. Producers reported more than US$19 billion in oil and gas writedowns last month as they acknowledged the loss in value of drilling prospects.

Of Goldman Sachs's lending risk, US$4.4 billion was to non-investment-grade companies, including US$1.6 billion of funded loans, according to the filing. Chief Financial Officer Harvey Schwartz said last month that the firm had less than US$200 million in exposure to commodity-trading firms, which view the bank more as a rival.

BLOOMBERG