Shell BG Merger will create World's Largest Producer of LNG - Banks Pile into Bridge Financing

Shell shareholders have approved a merger with their smaller, Reading, Berkshire-based rival BG to create the largest producer of LNG in the world. The merger will take place on Feb 15, 2016. Van Beurden has promised £2.5bn in cost savings.

Barclays Bank is the facility agent for the bridge financing of the deal. Bridge financing is a way to close the gap in order to raise finance to close a deal - at least until such time that the borrower can arrange long-term financing.

Bankers involved with Barclays in financing the deal include:

Alastair Macdonald, Deutsche Bank
John-Paul Way HSBC
Michael Atherton RBC Capital Markets, part of Royal Bank of Canada
Thierry Muschs, Sumitomo Mitsui Banking Corporation

The VIX in 2015 (and a little bit of 2016)

24 January 2016 - the VIX is trading at 22.34.

Exactly five months ago to the date, on Monday, August 24, 2015, the VIX peaked at 40.74, reducing to 36.02 the following day. This corresponded to a sudden drop (and whipsaw action) in the S&P 500 Index.

The next day, though people kept selling the index, they also sold off volatility, anticipating a rebound in the index.

It was also an interesting time to contemplate risk reversals, selling puts and buying calls, to take advantage of the change in market direction (here risk reversal is considered as an investment stratey rather than measure of vol skew).