Glencore Said to Seek Improved Credit Rating on Wider Debt Plan

  • Swiss commodity trader said to target BBB+ rating at S&P
  • Glencore has expanded asset sales to include two copper mines

Glencore Plc, the commodity trader and miner seeking to cut its $30 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 to upgrade its BBB rating by one notch in the long term, said the people, who asked not to be identified because the target hasn’t been announced.

Chief Executive Officer Ivan Glasenberg announced the debt plan in September in response to investor concerns about the company’s capacity to repay borrowings amid a rout in commodity prices. Glencore said on Monday that it’s seeking to sell two copper mines in Australia and Chile, prompting analysts to predict that the firm may exceed its target of raising $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.

Balance Sheet

The company, this year’s worst performer in the U.K.’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 last month cut their outlook on Glencore to negative last month.

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

Glencore advanced 3.6 percent to 121.95 pence by 10:51 a.m. in London. The shares are down 59 percent this year, valuing the company at about $27 billion.

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

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