08 December 2015 by lberuti
With oil trading at a multi-year low and failing to stabilise following OPEC’s chaotic meeting on Friday, commodities have been front and centre recently. Things accelerated somewhat today in creditland, and all the red squares in the above Grapple (ie names which saw their risk premium increase during the session) represent commodity or emerging market related names. In Europe, the main casualty was AALLN ( Anglo American Plc ), despite announcing some balance sheet protection measures during their Capital Markets Day. AALLN will suspend its dividend, intends to proceed with additional divestments (including the phosphate and niobium businesses), and will reduce capex. But that should not be enough to prevent the leverage from rising to almost 3x sometimes in 2016, up from 2x in June this year. With many analysts still wary of more downside risks to commodity prices, the investment grade rating of the company appears seriously at risk. The 5 year risk premium closed 57bps wider at 832bps.