JPMorgan stuns bond traders with premium bids for troubled miner

Bauxite. Stock Image.

JPMorgan Chase & Co’s high-yield traders caught their peers by surprise with bids for bonds of a troubled commodities firm that were well above the market.

JPMorgan’s traders on Monday sent out so-called price runs — indications of prices the bank would buy and sell on behalf of its clients — on Metalcorp’s €300 million ($293 million) of bonds in the range of 70 cents on the euro, according to multiple traders who declined to be identified and pricing seen by Bloomberg News.

That’s well above other bids, including those of Goldman Sachs Group Inc and HSBC Holdings Plc, which were in the range of 40 to 50 cents. JPMorgan lowered its bids on Wednesday, but they were still about 20 points higher than peers, the people said.

It’s not uncommon for there to be differences in bids, but the premium in JPMorgan’s pricing is unusual. In a note to clients late last year, the bank disclosed it had a long position in Metalcorp’s bonds on expectations the company will deliver on its earnings targets and reduce its leverage.

A representative for the US investment firm declined to comment on its trading prices and its long position. Metalcorp’s media representatives didn’t immediately respond to an email sent after working hours.

Metalcorp’s bonds have been in the limelight this week after the company said Monday that it couldn’t repay €70 million debt. The firm, a subsidiary of natural resources company Monaco Resources Group SAM, asked creditors to postpone the maturity of the notes by one year and said it had been planning to repay the bond with a mix of cash, commodity financing and loans.

The firm was unable to find alternative financing ahead of the maturity date also because of sanctions imposed on the Republic of Guinea, where the company mines bauxite.

(By Laura Benitez)


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