News Wrap

IN THIS morning’s News Wrap: Glencore relies on trading expertise to offset mining losses; APA aims to ramp up renewable energy spending; and Invesco buying short-dated Glencore, BHP notes.

Lou Caruana

Glencore relies on trading expertise to offset mining losses

With profits from his mining division evaporating, the debt-laden Glencore’s reliance on trading jumped to an unprecedented 76% of earnings in the first half of last year. Ongoing losses in mining mean that percentage is likely to increase when Glencore reports results next week, according to the Australian Financial Review.

Investors will be hoping Glasenberg's 30 years of commodity-trading expertise will pay off as the company wrestles down its $US30 billion debt load. While the 42% rebound in the stock so far this year indicates a debt-reduction plan announced in September is on track, the challenges presented by the rout in raw materials and China's slowing growth are far from over.

APA aims to ramp up renewable energy spending

APA wants a seat at the table in the multibillion-dollar investment boom in renewable energy sources over the next few years amid national moves to meet the mandated renewable energy target, according to the Sydney Morning Herald.

This month, AGL said it might launch a $3 billion fund to build renewable energy projects such as wind and solar farms.

Rival Origin Energy said it might invest in similar projects but would most likely buy the output under long-term contracts.

Invesco buying short-dated Glencore, BHP notes

Invesco, the manager of about $US741 billion of assets, is buying large miners' bonds as the industry cuts costs and shareholder payouts to withstand a slump in commodity prices, according to the Australian Financial Review.

The fund manager will increase holdings of debt from companies such as Glencore, Rio Tinto and BHP Billiton to above the level recommended in its benchmark from underweight, said Lyndon Man, a portfolio manager.

Acquisitions are centred on short-dated notes, including Glencore bonds maturing in less than three years and offering yields of about 5% following price declines.

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