Glencore considers IPO

Swiss commodity trading giant Glencore is rumoured to be considering an initial public offering (IPO), according to the Financial Times.

A Glencore spokesperson refused to comment on the story when contacted by Energy Risk, and said the company is unlikely to make any announcement to clarify the matter.

The FT reported that one of the main reasons for a flotation seemed to be finding new sources of expansion capital. While market insiders agreed that this was a credible reason, the IPO is not expected to be imminent but something being considered for the longer term. "It would make sense to do this near the top of the market and they will wait for a bull market. I imagine Glencore is not happy about its debt situation and credit rating and once you are a blue-chip company this is less of a problem," one analyst, who wished to remain anonymous, told Energy Risk.

Publicity-shy Glencore may also be looking to list due to recent speculation about its debt - speculation it chose not to comment on. Over three months from September 2008, the cost of insuring Glencore against a default on its debt using credit default swaps spiked 16-fold to more than 3,000 basis points, according to the FT.

While listing could end such speculation and protect the company's credit rating, it could harm its dominant commodity market position, says the analyst. "Glencore gives very little away and that is a distinct advantage they will lose in becoming a publically-quoted company," he said.