Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Glencore gets investor vote of confidence after credit renewal

Shares rose after commodity giant signed a new revolving credit facility
Glencore gets investor vote of confidence after credit renewal
Glencore has renewed the deal amid falling commodity prices

Shares in commodity trader and miner Glencore (LON:GLEN) shot up 10% on Wednesday as investors welcomed its move to refinance US$8.45bn of credit early.

The stock bounced 9.8p to 112.75p after Glencore, which has been battered by falling commodity prices, signed a new revolving credit facility (RCF) to replace its existing arrangement.

Glencore received commitments from its senior banks for US$8.4bn, representing an increase from 37 banks of close to US$3bn above existing commitment levels.

Encouraged by a high oversubscription level, Glencore has scaled back and signed in $7.7bn of such commitments andwill now broaden the refinancing via launch of general syndication to some 30 extra banks in the second quarter of 2016, making 67 taking part in total.

It last renewed the facility around March and April last year and announced it in May, meaning this year's announcement has come about three months early.

The company plans to use the cash to fund the marketing and commodity trading side of its business. Active bookrunners on the deal were ABN AMRO, Bank of Tokyo Mitsubishi, HSBC (LON:HSBA), ING and Santander.

Analysts said the share price rise reflected positive investor reaction to the miner being able to refinance a major loan facility early in such volatile commodity markets.

Mike van Dulken at Accendo Markets said: "An existing RCF of US$8.5bn is being replaced by a new US$7.7bn facility which is good news, keeping the ball in the air as the miner it aggressively reduces its cumbersome debt load, restructures and aims to rebound from the commodity sector depression."

SP Angel analyst John Meyer said: "The appetite for the RCF albeit syndicated out to 37 banks sends a strong signal that the credit markets are happy to take Glencore risk.

"Interestingly the RCF also carries an option for the company to convert into a term loan. This could suggest some of the worries over the banks may be overdone and also the perceptions of credit worthiness of the paper of mining companies."

Phil-Waller.jpg


Register here to be notified of future GLEN Company articles
View full GLEN profile

Glencore International Timeline

Article
October 09 2015

Related Articles

Will Ortac’s big move into Africa pay off?
October 29 2015
The rewards could be huge, but there are still risks
shutterstock_176428352.jpg
April 01 2016
Century Global Commodities is putting some hard work to good use with a change of strategy that will see it capitalise on the huge potential of its mining database.
flinders_-_woxna.png
April 21 2016
There's been an uptick in newsflow from graphite firm Flinders Resources Ltd in recent weeks, which looks set to continue through 2016.

© Proactive Investors 2016

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.