BHP EXPLORES SALE OF SHALE BUSINESS
Australian mining group BHP Billiton Ltd. said it was actively looking to sell its onshore U.S. oil-and-gas operations, reports Robb M. Stewart.
The announcement was a win for activist investor Elliott Management Corp., which has pressured BHP for months to spin off its U.S. petroleum assets. BHP said it had determined its U.S. shale operations were not core.
“Elliott had questioned the fit between BHP’s petroleum division and mining of iron ore, copper and other minerals, calling for sweeping changes including spinning off the shale business, launching an independent review of BHP’s global petroleum operations and collapsing its dual British-Australian structure around a single main listing in Sydney,” Mr. Stewart writes.
BHP, the world’s largest listed miner by market value, on Tuesday announced a threefold rise in its final dividend, while swinging back to an annual profit.
TESLA’S FIRST BONDS TAKE A DIVE
The price of Tesla Inc.’s first bonds has dropped more than 2% in the 10 days since their issuance, reports Matt Wirz.
The electric-car maker on Aug. 11 sold $1.8 billion of low-rated bonds–at an annual yield of 5.3%–to help finance its first mass-market car, the Model 3.
“But many investors sat out the deal, questioning the wisdom of buying bonds from a company that hasn’t turned an annual profit and is drastically increasing its spending a in a bid to break into the capital-intensive auto market,” Mr. Wirz notes.
The price of the bond fell to 97.75 cents on the dollar in recent trading, boosting the yield to 5.65%, and the bonds were the most actively traded junk bonds on Monday, according to MarketAxess.
BRAZIL TO PRIVATIZE ELETROBRAS
The Brazilian government on Monday announced plans to sell most of its stake in power utility Centrais Electricas Brasilerias SA, known as Eletrobras, reports Paul Kiernan.
The sale would allow for the “democratization” of Eletrobras’s shares, the mines and energy ministry said in a statement. However, the ministry said the government, which directly and indirectly currently owns around 60% of the shares, would retain a minority stake in the company.
“The transaction comes as Brazil’s government struggles to narrow a budget deficit approaching 10% of gross domestic product following the country’s deepest recession on record,” writes Mr. Kiernan.
Oil prices advanced Tuesday morning, retracing some of the prior day’s losses on the expectation of a further drawdown in U.S. crude inventories.
Brent crude, the global benchmark, was up 0.6%, at $51.96 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up around 0.4%, at $47.73 a barrel.
The market is anticipating a further reduction in U.S. stocks when the American Petroleum Institute, an industry group, releases preliminary data for last week on Tuesday afternoon, said Ehsan Ul-Haq, a director at energy consultancy Resource Economist Ltd. That set of data will be followed by weekly official data from the U.S. Energy Information Administration on Wednesday.