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S&P upgrades Glencore on robust financial framework, lower debt

S&P Global Ratings on May 29 raised its long-term issuer credit rating on commodities trader Glencore PLC to BBB+ from BBB while keeping the outlook stable.

The rating agency also lifted the issue rating on the senior unsecured debt issued by Glencore Funding LLC and other issuing entities to BBB+ from BBB and affirmed its A-2 short-term rating on Glencore.

The upgrade reflects Glencore's greater financial resilience, in line with its financial framework. The company has cut its net debt by about US$15 billion to US$11.4 billion and is maintaining its debt levels at structurally lower levels than those prior to 2015.

The lower debt is expected to help Glencore maintain its credit metrics even in a materially weaker commodity price environment. On the back of supportive metal and coal prices as well as controlled costs and expenditure, operating and cash flows are likely to remain strong following CapEx.

The stable outlook is based on the ratings agency's view that Glencore has sufficient room to accommodate modest acquisitions and moderate adverse commodity price or operational developments. The rebased balance-sheet debt level and prudent financial policies will also help the company sustain credit metrics comfortably over the next 24 months.

S&P could revise the company's outlook to negative and lower the ratings if it observes a loosening of the financial framework, especially in terms of acquisitions, dividends and share buybacks.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found in the sources section.