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Glencore opens up books to inspection

Glencore International AG, the world's largest commodity trader, is starting to open up more financial information to bondholders amid an unprecedented plunge in its markets.

After more than three decades operating as a closely held partnership, the Swiss company is issuing increasingly detailed quarterly reports. It provided net income to the public for the first time this week. That followed a December 5 statement issued to allay concern among lenders and bondholders, which came after the cost of insuring against Glencore defaulting on its bonds in the next five years jumped fivefold.

"Because it's a trading business there are questions about what is happening behind the scenes and what exposure they have," said Jonathan Pitkanen, an analyst in London at Aviva Plc, the United Kingodm's largest insurer, which has invested in Glencore bonds in the past. "There's some information but it is still hard for us to fully understand." Pitkanen declined to say if Aviva currently holds the bonds, according to Bloomberg News.

The employee-owned trading firm, which also controls mines and smelters across six continents, has been hurt by slumping demand for its zinc, aluminum and nickel from auto makers and steel producers. Bondholders and analysts were reassured after Glencore published its full-year results and held a two-hour conference call in which Chief Executive Officer Ivan Glasenberg and Chief Financial Officer Steven Kalmin answered questions.

"They do their best, even though they're a private company, to give a level of comfort to investors," said Jaap Smit, a fund manager at Robeco in Rotterdam. "It's very difficult for investors to get a relationship between their performance and their risk." Smit declined to say whether he owns the bonds.

Founded in 1974, Glencore trades metals, oil, coal and agricultural commodities.


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