The collapse in commodity prices has delivered a devastating blow to the mining company
After a week that saw its shares plummet spectacularly and then recover following a slew of warnings from bank analysts about its high levels of debt and the collapse in commodities prices, it is little wonder than some in the market have likened the problems besieging Glencore as similar to those that beset Lehman Brothers ahead of its collapse in 2008.
If the London-listed commodities trader and miner is to avoid the same fate as the infamous Wall Street bank, it will require the unwavering support of its largest shareholder, Qatar Holdings.
The Qatari sovereign wealth fund is this weekend understood to be feeling “raw” about the billions of dollars in paper losses it is carrying on Glencore, which listed its shares in May 2011 at 530p each.
The shares – which closed on Friday night at 95p – were trading at one point last week as low as 71.10p amid a frenzy of speculation that the commodities giant was in danger of defaulting on debt covenants and that its equity value could be worthless should the prices of key commodities continue to fall.