Glencore’s shares are among the leaders in the FTSE 100 today, buoyed by the latest (fleeting?) fillip in commodities prices, but its bonds are plumbing new depths and the cost of insuring them against default has hit all-time highs.

The price of the 2025 euro-denominated bond issued by Glencore’s finance arm has fallen to a fresh low of 59.7 cents today, while the yield has risen another 3 basis points to 8.17 per cent. The yield leapt 14bps yesterday and 54 bps last week, writes Joel Lewin.

Unsurprisingly, the cost of insuring Glencore debt against default is rising. More surprising is the extent of this rise.

The spread of the 5-year senior credit default swap (contracts that offer protection against a bond defaulting) has surged more than 150bps since the start of 2016 to an all-time high of 959bps. As recently as July it was trading at 168bps.

That level implies a credit rating of CCC, according to Neil Mehta at Markit. That’s deep in junk territory.

Both charts courtesy of Bloomberg.

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