Analysts are warning of dire financial consequences if commodity giant Glencore is unable to take control over is debt load. Glencore has one of the world’s largest commodity derivative trading desks in the world.
The share price dropped 30% after investment company Investec reported Glencore’s debt was significantly higher than its industry average and the company has a lower margin asset base. The cost of insuring Glencore debt surged on the news.
Investec warned if commodity prices don’t recover soon it will be extremely difficult for the company to repay its debts.
In many ways Glencore is more like Lehman Brothers than a mining company. As one of the world’s largest commodity derivative trading desks, if the Anglo Swiss company failed the financial impact would be felt across the globe.