LONDON (REUTERS) - Standard & Poor's downgraded commodities trader and miner Glencore's credit rating on Thursday, citing a slump in commodities prices and uncertainty about metals demand.
S&P cut Glencore's credit ratings to BBB-/A-3 from BBB/A-2, with a stable outlook. "The downgrade reflects both our view of the material challenges the mining industry faces, with increased uncertainty about future operating performance in 2016 and 2017," S&P said in a statement.
Glencore came under pressure last year from investors and ratings agencies to cut its net debt of around US$30 billion (S$42.8 billion), one of the highest in the industry, as prices for commodities such as copper and coal hit multi-year lows.
The company has since taken action to cut the debt - including selling assets, slashing dividends and capital spending - and was targeting net debt of S$18 billion to S$19 billion by the end of 2016. "We see the potential for a negative rating action as low, given the expected continued deleveraging in 2016-2017, supported by management's strong commitment to strengthening its credit metrics and decisive actions to date," S&P said.
Glencore has said it remained focused on preserving its investment grade ratings.