With the slowdown in China’s economy (the world’s biggest consumer of raw materials) the recent boom in commodities and mining companies has turned into “the worst commodities rout in two decades”.
Glencore, a mining and commodity trading company with 2014 revenues of $221bn has just had its debt downgraded by Standard & Poor to one notch above “junk”.
The company has been working to reduce its net debt by cutting back on investments and selling some assets (with a possible stock market flotation of its agricultural business).
This appears to be working. Shares in the firm were up 15% on Thursday afternoon as hedge funds scrambled to cover bearish bets they had previously made that the situation would be worse. Shares in Anglo American rose 23 per cent and those in BHP rose 13 per cent.
http://www.ft.com/cms/s/0/e0cdb4cc-cb54-11e5-be0b-b7ece4e953a0.html
http://www.ft.com/cms/s/0/388c65b0-9f08-11e5-beba-5e33e2b79e46.html