Moody’s Investors Service has changed Glencore’s rating to a ‘Baa2’ long-term issuer grading with a positive outlook.
It says Glencore’s improved credit rating was propelled by higher commodity prices and consistently low production costs.
“[Our decision] reflects material operating profit growth in 2017, which, together with continued conservative management of the balance sheet structure and leverage profile, positions Glencore strongly in the ‘Baa2’ rating category,” says Moody’s Senior Vice President Sven Reinke, adding that the rating could be upgraded if Glencore continues to demonstrate prudent balance sheet management.
It adds that Glencore’s improved earnings before interest, taxes, depreciation and amortisation (Ebitda), reduced leverage and higher funds from operations, supported by the group’s adjusted dividend policy, enables it to better withstand volatility in the commodity markets.
The rating firm further said it expects Glencore’s Ebitda to improve to around $16.1-billion this year, compared with $13.4-billion in 2017.