Glencore share price ends sharply lower in race against time amid global commodities price rout
After more than £2bn was wiped off Glencore today the company faces a race against time
"As fears grew about the company's ability to withstand the prolonged rout in global metal prices."
Shares in Glencore ended the day at a new record low, down 29.4 per cent to 68.62p per share in London. Other miners were also left reeling from the fallout, with Anglo American and Antofagasta down 9.3 per cent and 4.2 per cent respectively.
Marc Eliot, an analyst at Investec, said that today's share price fall was due to "concern over the balance sheet." He said data pointing to a massive increase in Glencore's five-year credit default swaps suggests people are worried about the debt.
The cost of insuring exposure to the debt of Glencore hit record highs today. Data provider Markit said five-year credit default swaps (CDS) in Glencore rose 154 basis points from Friday's close to 708 basis points. This outstrips the previous highs of around 670 bps hit in October 2011.
"Management has outlined a plan that ensures they can get through the next 12 months," Marc Elliot, an analyst at Investec, told City A.M.
"Longer-term than that, if things don't improvement [Glencore's management] could take it private."
Analysts also said that the market was nervous over Glencore's huge debt pile.
"They have to pay a hell of a lot in financing and interest costs … and they're ability to service and refinance the debt that they've taken on if commodity prices take another leg down has people nervous," Elliot said.