Standard & Poor’s has downgraded Glencore’s debt to one notch above junk, citing the “challenging outlook” for the mining industry and increasing uncertainty about demand from China, the world’s biggest consumer of raw materials.
The rating agency said Glencore, which has been hard hit by the worst commodities rout in two decades, was now rated triple B minus, from triple B previously.
However, the company is not under review for a further downgrade unlike some of its peers including BHP Billiton. Moody’s, a rival rating agency, put through a similar downgrade of Glencore’s rating before Christmas.
Glencore has been working on a wide-ranging plan to reduce its debt and retain its prized investment grade credit rating. It has issued shares, sold future silver production and is seeking buyers for two copper mines and a minority stake in its agricultural business.
The Swiss company told investors in December it expects to have reduced its net debt to $18bn-$19bn by the end of 2016.
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