S&P pushes Glencore view to positive

S&P said it changed Glencore plc’s outlook to positive from stable and affirmed its BBB+ issuer rating.

“As of June 30, 2022, the company reached record low debt, with reported net debt of only $2.3 billion. In our view, Glencore has the most comprehensive financial policy of its peer group. The policy includes targets for the absolute debt level (through the cycle and as a result of acquisition); gearing ratio; a minimum rating of a strong BBB; and dividends. The outcome of low debt and the financial policy are now translated into abundant flexibility, which allows it to absorb operational shocks or seize opportunities without squeezing its balance sheet,” the agency said in a press release.

S&P said it estimates Glencore’s adjusted funds from operations to debt will stay at 55%-60%, which equates to an A- rating.

Additionally, S&P said it sees Glencore posting record earnings in 2022. “Strong copper, zinc, and coal prices, combined along with volatile energy prices, imply that Glencore could generate underlying EBITDA of $29 billion-$30 billion in 2022, compared with $16.6 billion in 2021.”

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