[LONDON] Glencore has told investors it is on track to cut debt and shown new data about its secretive trading unit in a fresh attempt to dispel the market worries over its finances which knocked 30 per cent off its share price on Monday.
The stock recovered a further 3 per cent on Thursday after credit analysts from Barclays said a meeting they organised 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 US$20 billion from US$30 billion, by selling assets, reducing capital expenditure, suspending dividend payments and raising US$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.
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 US$50 billion worth of credit lines from banks in the form of letters of credit to support its trading operations but has so far utilised only 30 per cent of the lines.