Noble Group chairman Richard Elman has increased his stake in the beleaguered commodity trader in an attempt to offset the ill effects from last week’s downgrade of the company’s credit rating to junk status by S&P.
As of last Friday, Elman holds 22.1 per cent of the company, up from just below 22 per cent according to Reuters.
Not that Elman’s move has helped to shore up the CDS or the bond yields, which on Monday were testing levels last seen in 2008 when rival Glencore 1-year CDS soared to 2283.05. Read more
Online interactive models offered up by brokers are usually rubbish. This one, from Liberum, isn’t. Click to play.
Spoiler: at spot prices it’s a *fail*. Read more
Right, so Glencore most probably isn’t the next Lehman.
But that doesn’t mean it can’t also herald a rather large change. Take this from BofAML:
With increased regulatory scrutiny on bank commodity exposure, we think that “business as usual” won’t be an option. While we don’t see an imminent liquidity crisis, we note that bank credit may inevitably tighten, albeit over time. Also, business models may need to be reengineered to be less dependent on cheap and easy access to financial leverage.
Which idiots do we blame for this?
On the face of it, another Glencore director has done the decent thing: following the example this week of fellow directors Tony Hayward and John Mack, Glencore non-exec William Macaulay has picked up a parcel of distressed Glencore stock.
And it looks substantial — 1.7m shares, purchased on Thursday at 90.91p — until you look at what Macaulay trousered barely three months ago… Read more
Just in case Glencore’s stock slide and general market volatility have distracted you from fully digesting the significance of this Saudi Arabia funding story from the FT’s Simeon Kerr in Dubai…
We thought we’d reiterate the really important bit about the rate at which the Kingdom is pulling funds from global asset managers:
Nigel Sillitoe, chief executive of financial services market intelligence company Insight Discovery, said fund managers estimate that Sama has pulled out $50bn-$70bn over the past six months.
“The big question is when will they come back, because managers have been really quite reliant on Sama for business in recent years,” he said.
Or, in chart form via Investec… Read more
Off some 19 per cent at 78.62 at one stage this morning. UPDATE: Make that 27 per cent, 72p and counting. Now… Read more
Seems worth capturing the action in Glencore stock on Friday afternoon…
Just watching this with a sort of grim fascination…
Glencore stock was struggling (and failing) to hold above 108p at pixel, down 9.5 per cent. Read more
Remember the days when investment bank credit-rating changes used to be top of the financial news agenda? And then the days when sovereign credit-rating changes were?
Well, today, it’s all about commodity traders. Read more
Banks have been pulling out of direct dealings in physical commodity markets ever since the Senate Report on Wall Street Bank involvement in the market outed a spree of systemic risks, competitive advantages and general concerns last November.
The question is, has this had any impact on commodity prices or even the ability of major commodity traders to get financing? Read more
This is how Glencore stock ended on Wednesday:
When people start worrying about commodity traders in bear markets, the commodity traders themselves tend to reassure the market with comments like: “Ha! This clearly demonstrates you don’t understand our business at all. Lower commodity prices are GRRREAT for us. They liberate our balance sheet on a working capital basis and allow us to focus on our real value add, which is… spread trading.”
Though, if you’re Glencore, you tweak the comment so it goes something like:
“Prices are still not making sense where they are … it’s the funds driving it where it is today, not the actual demand,” Mr Glasenberg argued. “They believe demand for commodities is going to fall and continue to fall and that’s their view. Our view is what we see on the physical movement of commodities and it’s not too bad. We see the flows are still pretty strong.”
You’ve seen the story.
Now here’s some reaction. Read more
We take an unseemly level of interest in Peruvian copper mine projects on FT Alphaville. It’s a side-effect of writing for Lex.
But then so too has a consortium of highly strategic Chinese resources investors (Minmetals, Guoxin International Investment, Citic)…
They’ve bought Glencore Xstrata’s stake in Las Bambas, a very big Peruvian copper asset, for $5.8bn cash, according to a release from Baar, Switzerland on Sunday: Read more
What now for Xstrata CEO Mick ‘The Miner’ Davis?
Bloomberg thinks it has the answer: Read more
On the day the Dow is expected to open at a record high, the hottest M&A story of the year — Glencore and Xstrata — brings us the following.
First the collective news (via the FT): Read more
We are talking here about Glenstrata, of course, going ex-Mick Davis and cum-Ivan Glasenberg as soon as the last bits of competition authority clearance arrive…
Ivan has already sent industry tongues a-wag with some off-the-grid comments at a BMO Capital Markets conference in Florida, as reported by Reuters:
What we’ve got to do, when the markets do get stronger, no need to keep building a new asset and let’s keep the market tight for a while…
Alternate working title: Opec-cartel style
We’ve already heard from Oleg Deripaska on the matter. And we’ve started to see the consequences hit Rio Tinto and BHP Billiton. But the latest “we must rein in supply” Opec-cartel style talk, actually emanates from Glencore CEO Ivan Glasenberg.
Bloomberg has the story ( hat tip to Reuters’ John Kemp) and it offers few cracking paragraphs to say the least: Read more
Maybe this was inevitable after the Qataris said they would approve Xstrata’s merger with Glenstrata, but would abstain on the retention bonuses. But the raw numbers of shareholders here saying payments to management were excessive suggest a very aggressive mood amongst institutions. Remember, this is a revised incentive scheme, where shareholders were supposed to have been listened to…
The result from Xstrata’s shareholder meeting on Tuesday… Read more
Subject to the vote of Xstrata shareholders later on Tuesday, of course. And one or two regulatory hurdles remain. But while we wait for the XTA vote, here are the voting results of the Glencore shareholder’s meeting… Read more
A few nervous bid arbitrageurs have their eyes on the Qataris right now — wondering, expectantly, whether the Gulf state’s sovereign wealth fund will now support the
takeover merger of equals between Glencore and Xstrata.
The Glenstrata share ratio has been hiked and the Qataris, it is assumed, don’t really care about the size of retention bonuses at Xstrata. But a public endorsement of the deal was noticeably lacking on Monday… Read more
Here’s the key bit from Monday’s confirmation that Xstrata’s independent directors are once again recommending merger terms from Glencore…
1. To approve the New Scheme subject to the resolution to approve the Revised Management Incentive Arrangements to be put to the Further Xstrata General Meeting being passed. The Independent Xstrata Non-Executive Directors intend to recommend unanimously that eligible Xstrata Shareholders vote in favour of only this resolution at the New Court Meeting; and Read more
So much for D-Day in the unending saga of the Glencore-Xstrata tie-up.
Hot off the RNS feed on Friday: Read more
When the chief executive of UC Rusal, Oleg Deripaska, takes to the pages of the FT to air his frustrations about his industry, you’ve got to sit up and listen. Especially when he concludes that output caps are needed to overcome the problems.
Rusal, of course, is one of the world’s top aluminium producers and Deripaska, it turns out, wants output caps because he is worried about the strange anomalies which are gripping his market. Read more
Final terms from Glencore in its hostile bid for Xstrata include this weird proposal:
In order to provide clarity on the issue of CEO succession, Mick Davis will become the Chief Executive Officer and executive director of the Combined Group on the Merger becoming effective but to step down within 6 months with Ivan Glasenberg becoming Chief Executive Officer of the Combined Group at that time.
Fierce statement out of Xstrata on Friday afternoon…
The Independent Directors of Xstrata plc have today written to Glencore International plc to request clarification of the outline proposal (the “Proposal”) provided to the Xstrata Board immediately prior to the Xstrata Court Meeting and New Xstrata General Meeting today in Switzerland. Read more