Investec: Glencore equity value could evaporate

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The trigger for the slide is being widely attributed to a note from Investec Asset Management that predicted Glencore, which has more debt than most major mining companies, might soon be unable to keep up with its debt payments. “If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate.” Hunter Hillcoat, an analyst at Investec, said: "Mining companies gorged themselves on cheap debt in a race to grow production following the Chinese stimulus that occurred in the wake of the great financial crisis. "The consequences are only now coming home to roost, as mines take a long time to build." Glencore is being weighed down by a £20bn debt pile that is becoming increasing difficult to service as the company faces declining revenues as a result of falling commodity prices. (source: Quartz, BBC) (VIEW LINK)

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