After a compromise concerning the proposed mining tax with the Australian government, BHP BIlliton (NYSE:BHP) and Rio Tinto (NYSE:RTP) credit default swaps dropped.
Credit defaults swaps are used as a protection against defaulting on debt or bonds. The higher the basis points the more costly the insurance is.
For BHP, they fell 2 basis points to 91.5 basis points, while Rio Tinto fell 3 basis points to 134.5, according to prices from Nomura Holdings Inc.
This signals to investors that credit quality has improved for the companies, although at times it can be more perception than underlying reality.
Either way it's good for companies, as it lowers the cost of doing business.
Showing posts with label Super Tax. Show all posts
Showing posts with label Super Tax. Show all posts
Friday, July 2, 2010
Wednesday, June 30, 2010
Deutsche Bank (NYSE:DB) Upgrades BHP Billiton (NYSE:BHP)
The market largely ignored the upgrade of BHP Billiton (NYSE:BHP) by Deutsche Bank (NYSE:DB), punishing the stock in New York as continued concerns over demand for raw materials in a shaky global economy continue.
Add to that the unsurety of the super tax in Australia and there's a need to settle things down to get a better picture of where they are going, especially with external forces like the Australian government acting upon them.
For the upgrade, it was from a "Hold" to a "Buy." On June 16, JPMorgan went the opposite direction with BHP, downgrading them from "Neutral" to "Undeweight."
While it seems the Australian miners definitely have an upper hand, and half the country surprised the politicians by supporting the miners with the 40 percent super tax.
It wasn't to solely support the mining companies, but the understanding it could devastate their economy and the good jobs the industry provides for them.
As with all governments around the world, Australia needs to realize they need to cut back on their programs and promises, as it's simply not sustainable, as Europe, the United States, and now Australia, are proving.
Add to that the unsurety of the super tax in Australia and there's a need to settle things down to get a better picture of where they are going, especially with external forces like the Australian government acting upon them.
For the upgrade, it was from a "Hold" to a "Buy." On June 16, JPMorgan went the opposite direction with BHP, downgrading them from "Neutral" to "Undeweight."
While it seems the Australian miners definitely have an upper hand, and half the country surprised the politicians by supporting the miners with the 40 percent super tax.
It wasn't to solely support the mining companies, but the understanding it could devastate their economy and the good jobs the industry provides for them.
As with all governments around the world, Australia needs to realize they need to cut back on their programs and promises, as it's simply not sustainable, as Europe, the United States, and now Australia, are proving.
Thursday, June 24, 2010
Australian Miners Helped by New Prime Minister? No!
The novelty of have Julia Gillard be appointed as the new prime minister is only that: a novelty; at least as far as how it affects mining companies.
Gillard has already committed to pursuing the outrageous policies of Kevin Rudd, who introduced the highly controversial and unwanted super tax on mining companies. There is no change there.
As a matter of fact, some of these mining company leaders are acting like foolish schoolboys, embracing the "conciliatory" tone of Gillard.
Who cares about how nice she says something. What are the miners going to do. Give her anything by batting her political and real eyelashes at them?
It sound similar to Obama in America, who enjoyed the novelty of being voted in as the first black American president, but was given far too much leeway in implementing policies the vast majority of Americans opposed.
Hopefully Australians and mining companies, who largely rejected Rudd, will quickly get the stars out of their eyes and realize Gillard may be even more unyielding in her demands.
Almost falling all over themselves, BHP Billiton (NYSE:BHP) said through a spokesman, "We look forward to working with the government in this new way to find a solution that is in the national interest."
They even suspended an anti-tax advertising campaign because Gillard sounded conciliatory.
Who cares what she sounds like. Her policies are as poisonous as Rudds, and she backs them up just as strongly.
Just because she talks nice doesn't change a thing. Miners and Australians beware! Nothing has changed, and it's just got more dangerous.
Realize it's the opposition that resulted in Rudd's removal, not anything Gillard has to offer. Keep the opposition up and don't cave until she capitulates.
Otherwise you'll end up like Americans who have to unravel all the mess Obama has created in a short 18 months in office.
Gillard has already committed to pursuing the outrageous policies of Kevin Rudd, who introduced the highly controversial and unwanted super tax on mining companies. There is no change there.
As a matter of fact, some of these mining company leaders are acting like foolish schoolboys, embracing the "conciliatory" tone of Gillard.
Who cares about how nice she says something. What are the miners going to do. Give her anything by batting her political and real eyelashes at them?
It sound similar to Obama in America, who enjoyed the novelty of being voted in as the first black American president, but was given far too much leeway in implementing policies the vast majority of Americans opposed.
Hopefully Australians and mining companies, who largely rejected Rudd, will quickly get the stars out of their eyes and realize Gillard may be even more unyielding in her demands.
Almost falling all over themselves, BHP Billiton (NYSE:BHP) said through a spokesman, "We look forward to working with the government in this new way to find a solution that is in the national interest."
They even suspended an anti-tax advertising campaign because Gillard sounded conciliatory.
Who cares what she sounds like. Her policies are as poisonous as Rudds, and she backs them up just as strongly.
Just because she talks nice doesn't change a thing. Miners and Australians beware! Nothing has changed, and it's just got more dangerous.
Realize it's the opposition that resulted in Rudd's removal, not anything Gillard has to offer. Keep the opposition up and don't cave until she capitulates.
Otherwise you'll end up like Americans who have to unravel all the mess Obama has created in a short 18 months in office.
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