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Full Metal, not Stainless

24 July 2015 by pdonnat

AALLN ( Anglo American Plc ) reported today its earnings for the first half of 2015. With a reduction of the EBITDA by 36%, no dividend cut, very negative perspective on the iron ore prices, the credit investors had to comfort themselves with an assets’ sale program. The equity investors cheered first the earnings with the stock price up 4% but at the closing the stock was down 3.5%. The credit investor got it right. The CDS traded weaker all day long, closing 27bps wider at 265, the widest over the last three years as you can see on the attached grapple. This is just 20bps apart from the iTraxx Europe Crossover index. AALN is on the edge of losing its investment grade status and become a fallen angel with heavy metal wings.