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Junk status downgrade by Moody's

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Super Contributor
What do you think this means for the market today? Pretty bad timing considering results announcements and promises today
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21 REPLIES 21
Not applicable
From what I could see, the fundamentals were not good yet AGL has been one of the best performers in the last few weeks. I would have never expected it to run like it did except for the USD Index which tanked. To answer your question, I would expect a negative reaction, but who know, maybe something else is driving AGL up.
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Super Contributor
Its going to retest the low in my opinion.. Theres going concern risk
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Super Contributor
Market like the restructuring plans it seems
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Super Contributor
Make a 5+ billion USD loss, get downgraded to junk and shares rally? What am I missing?
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Super Contributor
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Super Contributor
Strange..BIL gets downgraded one notch and it gets slaughtered..very weird
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Super Contributor
It has been slaughtered for a year, the numbers were no surprise. The fact that they ready to start disposing of the dead wood makes mr market happy for now!
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Super Contributor
I think the bottom is in on AGL, to give the market that results and to then not be down 20% means the bottoms in.
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BullsnBears
Contributor
Good move getting rid of KIO. It's best days are behind it. Generally a good plan by Anglo but it will be hard to dispose of these assets in this down cycle.
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Super Contributor
It should be easy to dispose but the price will be significantly impaired.. Companies will only look at mining assets are ridiculously discounted prices.. Because the operations are most certainly unprofitable at current commodity price levels. AGL would've been better advised to mothball some operations as they wont be as well positioned now for the upturn in the cycle.
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BullsnBears
Contributor
KIO definitely. The others I'm not so sure. As for Minas Rio they really should just get out of that disaster once and for all.
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Valued Contributor
short squeeze, some 18% of AGL stock has been sold short as of yesterday ..
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Super Contributor
Not sure if Simon or anyone else will know but isn't it that certain funds will now be forced to sell off positions in AGL as its not investment grade? Wont that be a drag on the share price?
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Valued Contributor
that issue more with debt instruments rather than stocks
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Super Contributor
Perhaps the GUPTA's will buy KIO on the back of a guarantee from ESKOM - to take her ore at 2012 prices (because that would save 4 years of inflation - so it will actually be for the taxpayers' benefit.) ESKOM could then embark on a world first - a scientific exploration of how to burn FE in her organic furnaces. It's all very exciting.
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Super Contributor
Why doesn't Eskom buy the coal mines themselves..no middlemen required..bring down electricity costs
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Super Contributor
She would rather burn the suppliers (pun intended.) She helped sink OPTIMUM then turned around and guaranteed offtake on the very coal she had so severly criticised - the difference being that this time it was to assist the Gupta's to raise finance to buy the miner.
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Super Contributor
So how would you guys play an AGL..Short rather then long?
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Super Contributor
Depends on your view on the underlying commodity prices. I have taken a position - about half of them left now. You may never get the chance to buy an asset of this scale at this price again. AND they trade nicely in the meantime. "You pays your money and you takes your chances."
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