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Glencore Default Risk Surges Above 50%

Tyler Durden's picture




 

Glencore is in total free-fall across all markets today. Most worrying for systemic risk concerns is the rush into credit protection that has occurred, as counterparties attempt to hedge their exposures. Forthe first time since 2009, Glencore CDS are being quoted with upfront pricing (something that happens as firms become seriously distressed). Based on the latest data, it costs 875bps per year (or 14% upfront) to buy protection against a Glencore default (which implies - given standard recoveries - a 54% chance of default).

 

Do not panic!!

 

These are the highest levels of risk since the post-Lehman systemic crisis...

 

As Bloomberg reports,

Derivatives traders started demanding upfront payments to protect against a default by the company, the first time that’s happened since 2009, according to data provider CMA

 

The cost of five-year credit-default swaps jumped so high that they effectively were pricing in 54% odds that the company defaults, CMA data show

 

“Glencore management need to make an official announcement to calm nerves,” said Darren Reece, a money manager at GAM Holdings AG in London, which oversees $127b

Charts: Bloomberg

 

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Mon, 09/28/2015 - 11:32 | 6601935 Dr. Engali
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Another graveyard the fed keeps whistling past as they escort the U.S to the mother of all graveyards.   

Mon, 09/28/2015 - 11:36 | 6601954 KnuckleDragger-X
KnuckleDragger-X's picture

Yep, but I get the feeling that they are just the first on the list of moon sized craters in the marketplace that are getting ready to form.......

Mon, 09/28/2015 - 11:37 | 6601962 highandwired
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Glencore, RIP

Mon, 09/28/2015 - 11:40 | 6601973 Fish Gone Bad
Fish Gone Bad's picture

I am just guessing here, but this looks like it is REALLY going to hurt a lot.

Mon, 09/28/2015 - 11:48 | 6602002 NoDebt
NoDebt's picture

CAN NOT read an article about Glencore without my brain going to 'Glengarry Glen Ross'.  Even some of the quotes from that movie seem entirely apropos in this situation:

"First prize is a Cadillac El Dorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you're fired. Get the picture?"

I think Glencore is coming in third right about now.

Mon, 09/28/2015 - 11:53 | 6602031 KnuckleDragger-X
KnuckleDragger-X's picture

Good call ND, and once again reality imitates the movies......

Mon, 09/28/2015 - 11:44 | 6601992 OldPhart
OldPhart's picture

Looks like another day of excitement in the "market".

Mon, 09/28/2015 - 11:33 | 6601937 Bill of Rights
Bill of Rights's picture

Wheeeeeee!

Mon, 09/28/2015 - 11:33 | 6601940 yrad
yrad's picture

Rut row.

Mon, 09/28/2015 - 11:34 | 6601944 Temporalist
Temporalist's picture

Looks more like the odds of another bailout and QE infinity

Mon, 09/28/2015 - 11:38 | 6601965 KnuckleDragger-X
KnuckleDragger-X's picture

Theyll try but it won't work, which means they'll try something worse with President Zippy and Congress doing their bit to push things along......

Mon, 09/28/2015 - 11:35 | 6601950 franciscopendergrass
franciscopendergrass's picture

Goldman Sachs, WINNING!

Mon, 09/28/2015 - 11:40 | 6601971 KnuckleDragger-X
KnuckleDragger-X's picture

Not quite, they are down 2.6% on the Dow right now......

Mon, 09/28/2015 - 11:37 | 6601957 Harnar
Harnar's picture

S&P under 1900....Shouldn't the stock market be breaking right about now?

Mon, 09/28/2015 - 11:42 | 6601985 Fish Gone Bad
Fish Gone Bad's picture

It takes a while to die sometimes.

Mon, 09/28/2015 - 11:41 | 6601979 stant
stant's picture

Somebody get a oxygen bottle quick for yellen! Wheel her over to the chopper

Mon, 09/28/2015 - 11:47 | 6602005 MsCreant
MsCreant's picture

Nah, a little minature Darth Vader suit, with a helmet the shape of her hair. I can hear the ventillator breathing now...

Mon, 09/28/2015 - 12:59 | 6602352 Gambit
Gambit's picture

HAHAHAHAH!!! Coffee just sprayed out of my nostrils u assblast, fucked up my keyboard. 

Mon, 09/28/2015 - 13:45 | 6602586 cosmyccowboy
cosmyccowboy's picture

Darth is already on the fed board, he goes by the name of Stanley Fisher!

Mon, 09/28/2015 - 11:42 | 6601984 Trips Trading
Trips Trading's picture

Short Term Target Price almost reached, 1890 based on Negative Reversal. 

http://tripstrading.com/2015/09/26/sp500-negative-reversal-1h-and-4h/



Finish wave 5. 

http://tripstrading.com/2015/09/19/sp500-weekly-chart-2-or-5/

Mon, 09/28/2015 - 11:44 | 6601990 Seasmoke
Seasmoke's picture

This will blow Lehman out of the Water. And starting to look like it might actually happen !!!!

Mon, 09/28/2015 - 11:45 | 6601996 MsCreant
MsCreant's picture

When they make that announcement that everything is okay, we know for sure it is done. That is how this goes, silly wabbit.

Mon, 09/28/2015 - 11:58 | 6602043 Vylahkinnen
Vylahkinnen's picture

Did you just call me a filthy wahhabbit?! Oh...Sorry. Misread. Sorry.

Mon, 09/28/2015 - 12:20 | 6602139 ghostzapper
ghostzapper's picture

Glencore and DB - nice knowing ya.  

Mon, 09/28/2015 - 12:24 | 6602156 mademesmile
mademesmile's picture

questions.

1. Are they basically Enron, ie, insurers of insurers?
2. Will they get bailed out?
3. What the heck is a statement supposed to do?

Mon, 09/28/2015 - 12:27 | 6602183 Make_Mine_A_Double
Make_Mine_A_Double's picture

Buying Xstrata at the top of the market.

 

 

 

 

 

 

Sounded like a good idea at the time......

Mon, 09/28/2015 - 13:29 | 6602519 falak pema
falak pema's picture

Remember Tony Blair championed that deal; and he got his cut off the top !

Politicians don't open their "vital connection" lists for nothing.

Do NOT follow this link or you will be banned from the site!