Moody's changes outlook on Glencore's ratings to positive from stable
JOHANNESBURG (miningweekly.com) – Moody's Investors Service has assigned Glencore a ‘Baa2’ long-term issuer rating with a positive outlook.
Moody’s says Glencore's improved credit profile was driven by higher commodity prices and consistently low production costs.
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 Glencore to better withstand volatility in the commodity markets.
“[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 VP Sven Reinke, adding that the rating could be upgraded if Glencore continues to demonstrate prudent balance sheet management.
Based on the high point of the range for commodity price assumptions for copper, zinc and thermal coal, Moody’s expects Glencore's Ebitda to improve to around $16.1-billion this year, compared with $13.4-billion in 2017.
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