Glencore recently announced that it had sold as much as $2.2 billion of bonds to investors including BlackRock Inc. and the Government of Singapore Investment Corp. According to Glencore sources these bonds will be convertible on an IPO. A listing would mean an end to over three decades Europe’s sixth largest company operating as a closely held partnership.
"Going back a decade they probably didn't consider it, but there was a wakeup call for them during the credit crisis," one credit analyst at BNP Paribas SA in London told Regal Group International sources. "Now they realize they must diversify their funding methods to give themselves greater flexibility when those problems occur."
As commodity prices began falling towards the end of 2008, credit-default swaps on the company’s 5-year bonds climbed 10-fold, a sign that investors felt that there was an increasing chance of default.
In December last year, Standard & Poor’s cut the firm’s credit rating to BBB-, the lowest investment grade, Regal Group International has learned, and first quarter profits fell 69%.
Glencore’s CEO Ivan Glasenberg improved disclosure by releasing increasingly detailed financial statements and even publishing details of the firms earnings on its Web site earlier this year. Glencore’s net debt at the end of September was $9.3 billion.
In a recent statement available to Regal Group International the company said selling bonds "marks an important milestone as we embark on the next stage of our corporate development."
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