Glencore's "Investment Grade" Bonds Just Took Out September Crash Lows: Downgrade To Junk Imminent
In early 2014, when not a cloud was visible on the Commodity/Copper/China sky, we predicted that the best way to trade the upcoming Commodity/Copper/China Collapse is by going long Glencore CDS, the equivalent of shorting Glencore bonds (and implicitly stock).
Back then the CDS was at 170bps.
Less than two years later, going long Glencore CDS may have been the best risk/return commodity trade in the world, as over the weekend GLEN CDS blew out to new post-crisis highs of 1,128 bps, nearly 7 times wider than the 170bps from March 2014, but more troubling is that Glencore's 2021 bonds just hit a 5 year low, taking out the September crash levels, and trading at about 64 cents on the dollar. These are currently rated "investment grade" by the less than credible rating agencies.
However, following the recent junking of Noble Group which has sent its stock price to 12 year lows and which hints that a bankruptcy is now virtually inevitable, we expect Glencore to be junked any day now, with the ensuing cascade of margin and collateral calls testing just how "systematically unimportant" the world's largest commodity traders really are, because remember: the world's favorite finance "expert" for Wall Street hire, Craig Pirrong, recently concluded that "Commodity trading firms are not a source of systemic risk."
We'll find out soon enough.
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We already have bond losses for senior unsecured bond holders....Hooray!
Portugal Imposes Losses on Some Novo Banco Senior BondsCovered here already: http://www.zerohedge.com/news/2015-12-30/bail-ins-are-back-portugal-slap...€2-billion-loss
Noble Group from Singapore is at USD 61....
http://www.quotenet.com/bond/6_750-Noble-Group-Bond-2020-USG6542TAE13
Tata Steel, world's 3rd largest steel producer is at USD 80
http://www.quotenet.com/bond/ABJA_Investment_Co_PteDL-Notes_201424-Bond-...
Don't worry about bonds as there will be no real recovery what so ever!
The elite will soon run and hide in the bunkers paid for with citizens taxes, after engineering a full economic collapse as well as starting WW3, plus they will make sure that there are enough Jihadi's in the West to start a race war.
That should be enough to cover up the failed fiat ponzi scheme and take care of the 'excessive' population......
http://beforeitsnews.com/global-unrest/2016/01/the-lion-is-it-time-to-fi...
Shitty website, just sayin
Wow, he REALLY hates Muslims.
Nope! The DUMBS are gone ..
Been long gone for some time ..
There is no longer any place to hide ..
See Dr. Preston James ..
http://www.veteranstoday.com/2016/01/17/the-big-squeeze-is-now-on-the-kh...
http://www.veteranstoday.com/2014/07/30/the-coming-return-of-the-real-us...
Now to truly, honestly, and completely understand Glencore. You have to understand this Marc Rich (nope, he's probably not dead. Same for Sheldon Adelson. Both reside in Cuba.) ..
http://www.veteranstoday.com/2015/05/04/neo-so-much-more-than-nukes/
And understanding Hans, we get to further understand men like Wilhelm (aka Samuel), Heinz (aka Henry), and Georg (aka Poppy). And via all this, we now know why Waco and OKC (and via extension 9/11) really happened, and why things happened on Clinton's (and GWB's) watch. [1]
http://wantarevelations.com/2014/01/wanta-plan-macro-financial-economic-...
And speaking of the Clintons ..
Oh, it is much, much more than Benghazi. Remember something called the Children's Defense Fund? Remember a fellow named Vince Foster?
http://eagleonetowanta.com/wp-content/uploads/2015/12/Chapter17-Wanta-Bl...
Treason was committed long before all this. Long before the Clintons set foot in office. But query me this. How does one commit treason, against a corporation and its shareholders? Since when do we impeach CEOs? Quite a pickle we have gotten ourselves into. And it started long before a lot of us were born. So how to right this ship. Is it possible at all? Is there a ship to right?
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (Read Me First)
So far as WW3. That window of opportunity is probably long past .. (don't listen to any other source to the contrary)
http://www.veteranstoday.com/2016/01/13/putins-dilemma/
Query me this. Who is the more powerful? That which ordered and paid a Lt. Col. in the GRU to safeguard rocket [missile] fuel from rogue Soviet generals. Or, the former GRU (not KGB) Lt. Col.? Which personally possesses 2000 metric tonnes of former Soviet Union gold bullion in Austria banks? Is the former GRU Lt. Col. assisting (financially) the Hellenic Republic? Does the RF have any funds to assist anyone? Has the RF (or even China) made a deal with US Congress to reduce (and in short order completely eliminate) the US National Debt and trade deficits? Who has $30 billion (along with $5 billion to the other G20) to give to the other. The former GRU Lt. Col. Or, the other guy? What is even crazier (if we wish to think of this in such terms) is that it actually POTUS #40 operating from the grave. Pretty good feat for a dead person. Much better feat than say Keynes, or Marx, Lenin, Trotsky, Strauss, Kristol, or dare with say Nixon and Friedman ..
---------
[1] For the very, very brave ..
http://www.proliberty.com/observer/20070405.htm
Pretty hilarious how the rating agencies are always the last to know that the fair value of a bond is zero.
Except when the issuer of the bond is a government that's pissed off Wall Street, of course.
Their job isn't to know, their job is to give the illusion that an outside company is doing the due diligence for you in order to give the system legitimacy.
Right. Free market rating agencies would live or die by their reputations for thoroughness and accuracy. Investors could rely on their ratings accordingly. The current rating agencies are Potemkin rating agencies. Just another legally mandated cartel. They can rate accurately or inaccurately and it doesn't really matter to their profitability.
Free market rating agencies live and die by revenue. If some bunch of slickies want to pay for a better ratings, it's for sale.
The only objective viewpoint is from people with nothing to benefit one way or the other. Regulatory capture, pay-for-play, class consciousness, ethnic loyalty, group guilt, it all comes to the same in the end.
Doc, everybody is either making or taking, but the takers are winning. It really doesn't matter what their rating is, except that the defaults will be a "surprise".......
As far as I can tell the purpose of ratings agencies is to at you want to hear.
the job of the ratings agencies is to help the banks sell crap bonds at a premium. then when the bond prices crash the banks get to buy them back cheap on the rating agency downgrade. it's a big club and you ain't in it. (rip George Carlin)
Glencore's fine.
Contained even.
Even if they default, it won't be a default. We don't want anyone actually have to honor those default swaps.
Won't need CDSs. Dallas Fed said it was cool to show NO impairment on oil/gas related loan losses over the weekend (not sure if Glencore counts under that decision, but I bet it does).
And that's checkmate. No bank, no matter how imparied, will ever show a loss because of this. How handy is that? The crisis happens in the woods where there's nobody around to hear it, so it doesn't make a sound.
The Fed will buiy the debt from the banks at par.
Yeah, I pointed that out because Doc has long said the next bailout will be the oil and gas drillers. Well, their PAPER anyway, not the ACTUAL oil and gas drillers. Which means, of course, the BANKS. AGAIN.
Aren't final term presidential election years just awesome for bailouts? It's almost like there's..... a pattern or something.
Funny how that works out isn't it? It's almost like they say " hey make me look good while I'm in office and I'll make sure you get paid back and then some before I leave".
there you have it. QENext. "Dont mark these down because it will cause you more trouble than is necessary as we will just buy it from you and save your ass"
If the Fed buys bonds and writes them off at $0, does it count as "balance sheet expansion"?
Not if accounted for properly,but then you would need an audit to find out.
Saves the banks, but the bondholders/ trade creditors just got bent over and GM'ed.
I wonder just how long it will take them to realize that.
The bond market needs close watching.
What about shadow banking Tyler ?
That was the canary in the coal mine last time.
Holy shit! What's left to encourage well drillers / frackers to stop drilling / fracking if they can issue debt that will never be paid off? Do the juniors now have the same status as the US Treasury?
Gotta start me an oil company!
When the Fed orchestrated a back-door bailout of Glencore late September, following its crash, it let wealthy Jewish bondholders sell the bonds at a sudden gain to our pension funds. S&P are part of the Jewish cabal controlling the allocation of gains in the global economy. S&P had Russian sovereign debt rated at Junk, lower than Glencore's, despite the fact Russia can simply print as many rubles as it needs. Glencore, among all global conglomerates, is King Jew, more Jewish than even Goldman Sachs. The Jewish Fed views their main job as protecting the wealth of wealthy Jews. S&P is a key cog in that.
"Pull the Strings!" - Bela Lugosi in Glen or Glenda
And all the banks that are holding their paper will NOT need to mark it down on their books nor jeopardize their precious 'Tier 1' Capital, per the ZH article over the weekend.
Tylers- I think we need a follow-up article on that Dallas Fed decision to suspend mark-to-anything on drillers, oil companies, etc. I read it three times and I still can't believe the Fed can just step in and tell banks "don't show any losses." Not just mark-to-unicorn- NO LOSSES. Even my considerable and highly refined willing suspension of disbelief was strained on that one.
And who is to stop them? No one (or group) with any authority is willing/capable/knowledgeable/courageous enough to pick up that mantle.
One law for you, another for your lords and masters.
They don't have to mark to market value but if there is a default it goes from par to zero in one step. Only bailing out the companies can prevent that. Why not? It's only a trillion to do it.
Feels like I've sat in DeLorean and exited the vehicle in the year 2008... these type of words are likely to surface soon: Moral Hazard, Systemic risk, Contagion.
http://fcic.law.stanford.edu/resource/glossary
Well you sure won't hear about Moral Hazzard this time around. Any semblance of morals was abandoned along with rule of law in aught 9. And it ain't ever coming back.
Thanks for the link, WO. This is a great resource for those of us who can get lost at times in the financial jargon and acronyms.
For example;
PDCF
Primary Dealer Credit Facility
Program established by the Federal Reserve in March 2008 that allowed eligible companies to borrow cash overnight to finance their securities.
And you ain't eligible.
So Zerohedge recommended a hedge?
no, actually. unless one owned the underlying it is a one way bet. getting paid is the tricky part.
Calling Cagliostro Mike Milken : You gotta turn this junk into gold pronto !
Maybe if we called El Chapo in prison and made him a deal (not a bum one by Hollywood but a true blue Oligarch's bungaschlonger via a SIV in Caymans) : Buy out Gencore's junk with your white powder empire's hidden money and we'll get Mike Milken's son at the ECB to Draghiwash it.
Now that is capitalism at its best !
Convert commodity toilet paper into repackaged 'sniff a dip' holy grail ETF of free market's top paradisiacal mindblower !
Hey, you'll also have an unending hidden trail to "white wash" your narco-bilderbulge with an additional bonus : you join the Davos club.
You'll have Cluncker on "awl fours" kneeling to you like a mad poodle : I have the best Laundrymat in Lux ! And NOBODY can LIE like I DO when it gets serious! I AM truly SERIOUS as those Polacks are making my life hell.
Pshaw! El Chapo is too much of a choirboy to be allowed in Davos.
yes I suppose he can yodel like the rest of them.
Is this like that bacteria that poop gold harvested from slag?
"When those tax guys come knocking, I won't even remember my own name, much less yours."
and the stock price went from 300 to 75.
while i applaud the trade idea, i would rather short the stock, because then you dont have to worry a) about the cds counterparty risk, b) about whether you get screwed whether a default event has occured or not.
but still, great idea.
Unless some Albanian comes along and buys up all the wallpaper, then waits while the short scream hysterically. That's why they invented naked shorts.
Paper "comodity" (contradiction in terminis anyone ?) going down
Next !
Paper itself does have value, but nothing like the numbers being written on it.
paper & pulp?
is it true that Glencore was started by Marc Rich, the only person on the FBI's Most Wanted List to receive a Presidential Pardon...if so, imagine following that sewer back to its source...
Denise Rich is no longer a US citizen
Bush 41 pardoned Orlando Bosch, who killed 73 innocent people on a plane, you cockeating trailer-trash.
I too, reread the Dallas FED article, and was more incredulous each time I finished.
This place has taught me one thing...every time I think that they can't possibly extend, pretend or kick the can down the road any longer, I get shown that it can...it is...
I consumed a lot of beer and scotch this weekend, contemplating how long the madness will continue.
Note the Dallas Fed recently claimed a Goldman Jew was the most qualified guy to run the show. Amazing, no matter the situation, the process selects Goldman Jews.
son of a...... i'm long glencore, so this sorta suks. but i'm long from 1.04. right now still showing profit. i think i'll just hold and hope i don't take it in the bung hole
Glen Coredump