News Wrap

IN TODAY’S News Wrap: BHP could walk from hybrid raising; Glencore ‘open to offers’; and warning for Oz iron ore producers as China steel output falls.

Anthony Barich

BHP mulls hybrid raise

Diversified miner BHP Billiton could yet walk away from the debt-equity hybrid fundraising scheme it’s been talking up to global investors over the past fortnight, with one company source telling Reuters a delay in the process was possible.

“If the price isn’t right, then it will return to the market or [raise money] in stages when conditions improve,” a BHP lead manager said.

“The company would like the hybrid but it’s not in desperate need, and it won’t accept any price.”

The company’s South32 demerger and a rise in full-year dividends has coincided with a broader collapse in commodity prices to nearly double the cost of insuring against BHP’s five-year debt.

Glencore battles debt

The Sunday Telegraph has reported that debt-laden Glencore will listen to offers for a takeover of the Swiss commodities trader but its management does not believe anyone out there would pay fair value in the current market.

Glencore’s senior management will meet this week after its London shares plummeted 29% last week triggering a route that wiped some $A50 billion from the Australian Securities Exchange alone.

The trader’s market value has dropped by 83% since it floated at 530 pence a share in May 2011, with most of it coming in recent weeks after it unveiled a plan to cut its $41.8 billion net debt by a third.

China steel output drops

Australian iron ore producers have been given a fresh warning that China’s future demand would remain weak as the Asian giant’s troubled steel industry output shrank sharply by 3.5% year on year during August to 66.9 million tonnes.

Ongoing economic and property market uncertainty in China are driving steel demand down as the country saw a 1% increase during the corresponding month last year, The Australian reported.

China’s National Development and Reform Commission revealed that steel production slowed by 2% during the first eight months of the year, while the output in the first half of the year posted the first drop in nearly two decades.