Glencore chief executive Ivan Glasenberg won a vote of confidence from lenders that he can steer the mining company through a dismal market and restore it to financial stability.
The mining firm’s shares rallied to a three-month high after the firm signed new loan commitments to replace an existing $8.45 billion revolving credit facility.
It received commitments for $8.4 billion in the first phase of syndication, an increase of almost $3 billion above existing levels from 37 senior banks, according to a statement on Wednesday.
The company signed for $7.7 billion and plans to broaden the refinancing through a general syndication to about 30 additional banks in the second quarter.
The refinancing from Glencore’s lenders is a sign of the company’s strength amid a downturn in prices that’s already forced it to scrap the dividend, sell $2.5 billion of new shares and dispose of assets to raise funds.
It also comes after Standard & Poor’s cut Glencore’s credit rating to the lowest investment grade earlier this month after lowering its commodity price forecasts.
It’s “a positive development from the company, and whilst not finalized it is encouraging that there remains healthy demand to lend to Glencore,” Investec Plc analysts wrote in a note. “However, we would be surprised if the interest payments will be reduced as the commodity environment has worsened and the company’s credit rating is weaker than a year ago.”
Glencore enacted a $13 billion debt reduction plan last year to alleviate investor concern about its level of borrowing. The stock plunged 70 percent in 2015 and the cost of insuring its debt against default surged as commodities from oil to copper collapsed, eroding profits. The Baar, Switzerland-based company will report 2015 earnings on March 1.
Its stock rose as much as 10 percent to 113.50 pence in London, the highest since November. The shares have rallied 52 percent over the past month.
Glencore’s EUR1.25billion of 5.25% bonds due March 2017 rose for a fourth day to 100.8 cents on the euro, the longest streak of gains since November, according to data compiled by Bloomberg.
The company’s EUR750million euros of 3.375% securities maturing in 2020 also had a fourth day of gains, increasing to 86 cents on the euro, the highest since December.
The new unsecured facility contains a 12-month extension option and a 12-month borrower’s term-out option, extending the final maturity to May 2018.
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