Glencore seeks ratings boost with debt reduction plan

(Top) A stacker reclaimer at the Newcastle Coal Terminal in Australia. The global economic slowdown is exacerbating a coal glut that has driven prices for the fuel to the lowest level in eight years, according to Glencore. Its CEO Ivan Glasenberg (ab
A stacker reclaimer at the Newcastle Coal Terminal in Australia. The global economic slowdown is exacerbating a coal glut that has driven prices for the fuel to the lowest level in eight years, according to Glencore.PHOTO: BLOOMBERG
(Top) A stacker reclaimer at the Newcastle Coal Terminal in Australia. The global economic slowdown is exacerbating a coal glut that has driven prices for the fuel to the lowest level in eight years, according to Glencore. Its CEO Ivan Glasenberg (ab
Its CEO Ivan Glasenberg (above) announced a debt reduction plan last month.PHOTO: BLOOMBERG

LONDON • Glencore, the commodity trader and miner seeking to cut its US$30 billion (S$42 billion) debt load by a third, is targeting a higher credit rating, according to two people familiar with the situation.

The Swiss company believes that asset sales and other debt reduction measures may allow Standard & Poor's (S&P) to upgrade its BBB rating by one notch in the long term, said the sources, who asked not to be identified because the target has not been announced.

Chief executive officer Ivan Glasenberg announced the debt plan last month in response to investor concerns about the company's capacity to repay borrowings amid a rout in commodity prices.

Glencore said last Monday that it is seeking to sell two copper mines in Australia and Chile, prompting analysts to predict that the firm may exceed its target of raising US$2 billion from asset sales.

Glencore's credit rating target was reported earlier by the Wall Street Journal. A spokesman for Glencore declined to comment.

The company, this year's worst performer in Britain's benchmark stock index, said in an Oct 6 statement that its measures to strengthen its balance sheet will help it "protect and maintain a strong BBB/Baa credit rating".

Moody's Investors Service currently has a Baa2 rating on Glencore.

Moody's and S&P cut their outlook on Glencore to negative last month.

Glencore should be able to address concerns about its credit rating by selling assets, Mr Dominic O'Kane, an analyst at JPMorgan Chase and who has a neutral rating on the stock, wrote in a Sept 30 report.

Glencore advanced 3.6 per cent to 121.95 pence by 10.51am in London. The shares are down 59 per cent this year, valuing the company at about US$27 billion.

Mr Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on October 17, 2015, with the headline 'Glencore seeks ratings boost with debt reduction plan'. Print Edition | Subscribe