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 The stock recovered a further 3 percent on Thursday after credit
analysts from Barclays said a meeting they organized with members of
Glencore's management on Wednesday, including the co-head of
corporate finance Carlos Perezagua and the head of strategy Paul
Smith, managed to address many concerns of investors and
bondholders.
"The market is telling us that Glencore is in financial distress.
Our credit colleagues believe this is premature and do not have
those concerns - they do not think Glencore is at risk of imminent
default," Barclays analysts said in a note adding that it believed
the company can retain its investment grade credit rating.
Glencore market jitters were triggered by worries that if the
collapse in commodities prices over the past year persists for too
long it will stretch the company's ability to earn enough to service
its debt.
Glencore has already pledged to cut its net debt to $20 billion from
$30 billion, by selling assets, reducing capital expenditure,
suspending dividend payments and raising $2.5 billion of new equity
capital with the share sale completed earlier this month.
Glencore told investors and bondholders on Wednesday that it was on
track to sell a stake in its agricultural business by yearly next
year, according to Barclays.
It also hopes to complete a so-called streaming deal - when it would
sell by-products such as silver or gold from copper production at a
fixed price before it is mined - by the end of this year.
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A source close to Glencore confirmed the meeting with bondholders
mainly focused on the balance sheet and debt reduction plan.
The Barclays analysts' reported Glencore also told the meeting it
had $50 billion worth of credit lines from banks in the form of
letters of credit to support its trading operations but has so far
utilized only 30 percent of the lines.
(Reporting by Dmitry Zhdannikov, Sarah McFarlane, Olivia Kumwenda;
Editing by Greg Mahlich)
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