credit risk capital raising flag

The signal is there for large capital raising.


BHP open to using debt to pay dividends

Read more: http://www.smh.com.au/business/mining-and-resources/bhp-open-to-using-debt-to-pay-dividends-20151022-gkgccu.html#ixzz3zZRxExJn

2 Feb 2016
BHP Billiton credit rating drops from A+ to A rating amid commodities price pressure

Standard and Poors
S&P - creditwatch negative reflects possibility that we could cut rating by
another notch if BHP remains committed to its progressive dividend policy

Unsecured debt downgraded to BBB+ or just above junk
This could have an effect on the ability to issue bonds or at least the attractiveness of BHP bonds which would effectively make it more expensive for BHP to raise capital. Institutions might make demands for shares as part of the any bond deal because they have greater bargaining power.

BHP long term fundamentals will not prevent institutions having the upper hand in negotiations because
the market only deals with near term economics.

The rise in price without any real change in commodities in the last week indicates a capital raising is on the cards.
In my personal experience irrational price moves are always a leading indicator of capital raisings in this type of circumstances