Fears surrounding Glencore have skyrocketed this week as shares on global markets plunged upward of 25 percent following the release of an Investec note highlighting the troublesome debt load at the company.

Glencore is one of the largest global resource companies, and fears that it could ultimately be dragged into default by its debt load have Wall Street once again whispering of Lehman Bros, systemic risk and “too big to fail” mentalities.

The Debt

The source of all the worry surrounding Glencore is its debt load. As the Investec note pointed out, the company has a much larger debt-to-equity ratio than peers Rio Tinto plc (ADR) RIO 0.18%, BHP Billiton Limited (ADR) BHP 1.49% and Antofagasta plc (ADR) ANFGY 0.59%.

Worries over the debt load have sent Glencore’s current credit default swap (CDS) rates surging. Current rates imply a 54 percent chance of default, the highest level since 2009.

Lehman 2.0?

As bad as it would be for a single commodity trading company the size of Glencore to fall, the true fear in the market is…

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