Glencore Says Has No Difficulties in Opening Letters of Credit

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Oct 2008

Glencore International AG, the world's biggest commodity-trading company, said it has had no problems in getting letters of credit, used to finance transactions. Some suppliers of oil, coal and other commodities are losing sales as the credit crisis spreads beyond financial institutions, and banks refuse financing or increase the fees for buyers. ``Glencore confirms that it is not encountering any difficulties in opening letters of credit,'' Marc Ocskay, a spokesman for the Baar, Switzerland-based company, said in an e- mail Friday. He declined to comment further.
Of the $13.6 trillion of goods traded worldwide, 90 percent rely on letters of credit or related forms of financing and guarantees such as trade credit insurance, according to the Geneva-based World Trade Organization.
Glencore is the world's largest supplier of bulk ferroalloys such as ferrosilicon and ferromanganese, according to Moody's Investors Service. The company also trades industrial metals such as copper, coal, oil and grains.
The cost of protecting against a default by Glencore rose as much as threefold this month. Investors are running ``scared'' from mining companies, Jonathan Pitkanen, a credit analyst at Aviva Investors in London, said Oct. 24.
Credit default swaps for Glencore's five-year bonds fell 45.7 basis points to 1,193.1 yesterday, according to data compiled by Bloomberg.

Source: Bloomberg