Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Glencore Credit Swaps Fall by Record as Xstrata Offer Raised

Sept. 7 (Bloomberg) -- The cost of insuring against default on Glencore International Plc’s bonds fell by a record after the commodities trader raised its offer for mining company Xstrata Plc in an effort to salvage its takeover.

Credit-default swaps on Glencore dropped 80 basis points to 241, the lowest since March 5, and the biggest daily decrease since Bloomberg began compiling data in 2005. Contracts on Xstrata fell 42 basis points to 142, the biggest drop since data began in 2007.

Glencore, owner of 34 percent of Xstrata, increased its all-stock offer to 3.05 of its shares for each one in its target from 2.8, and proposed that its Chief Executive Officer Ivan Glasenberg holds the role in the combined group rather than Xstrata’s CEO Mick Davis. The revised terms were meant to overcome opposition from Xstrata investors including Qatar Holding LLC and Knight Vinke Asset Management LLC.

“If the deal happens it’s certainly good for Glencore bonds and for Xstrata it’s mildly positive,” said Michael Ridley, a credit analyst at Mizuho International Plc in London.

A basis point on a credit-default swap protecting 10 million euros ($12.7 million) of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

To contact the reporter on this story: Abigail Moses in London at amoses5@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.