By Kim Christian
(Australian Associated Press)
BHP Billiton shares have fallen more than four per cent as weaker commodities prices and worries about global growth weigh on the mining giant.
Investors are also questioning the strength of BHP’s balance sheet after the company announced plans to raise debt from investors through the issue of multi-currency hybrid securities.
Shares in the miner lost $1.06, or 4.4 per cent, to $22.80, their lowest price since November 2008.
IG market strategist Evan Lucas said the stock had been savagely sold off in London overnight as copper and coal prices fell.
“If you look at where copper and coal are going, that’s part of it and the update today is an interesting take on where BHP finds itself in the cycle,” Mr Lucas said.
“There is a rumour that BHP may have to change their Australian dividend plan and that is not going to impress those that were getting BHP for that reason.”
BHP on Tuesday unveiled plans to raise debt from investors through the issue of multi-currency hybrid securities in a global marketing effort across the United States, Europe and Asia from September 28.
Mr Lucas said investors were now questioning whether BHP’s credit rating could be impacted by the debt raising and concerns about the company’s balance sheet.
He also said BHP’s share price was now testing the low point it hit in August, with the miner offering the biggest discount in price to net present value that it has ever had.
Still, he said the sell-off needed to be viewed as a whole market sell-off.
Companies with the highest amount of exposure to China needed to demonstrate how they would deal with changes to the Chinese economy, he said.
Mr Lucas believes China housing and growth concerns will have copper testing its August lows.