This was after Investec released a bearish investor note on Glencore in light of the now depressed commodity prices.
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Zacks upgraded shares of Glencore global PLC, St. Helier from a “sell” rating to a “hold” rating in a report on Wednesday, September 9th.
Britain’s blue-chip index has slipped deep into the red in today’s session, led lower by Glencore (LON:GLEN) whose shares have been sold off on the back of a downbeat broker note.
Glencore shares tumbled more than 30 percent to an all-time low on Monday on fears that the mining and trading company was not doing enough to rein in its debt to withstand a prolonged fall in global metals prices.
‘It was concern on precisely this issue that we believe forced Glencore to act recently, with a package of measures including cutting near-term dividends, raising $2.5 billion in equity and committing to $2 billion of asset sales’. Investec Plc warned Monday that there was little value for shareholders should low raw-material prices persist.
Glencore’s share price was down 20 percent at a record low of 77 pence ($1.17). The stock is down around 70 percent year-to-date.
Vodafone fell 3.9 percent after the mobile phone group said it had ended talks with Liberty Global about exchanging assets to better compete in Europe’s converging telecoms and media markets.
Goldman Sachs said that should commodity prices fall another 5 percent, the metrics needed to maintain Glencore’s credit rating would be out of the required range.
The company has hired Credit Suisse Group AG and Citigroup Inc.to unload a minority stake in the agricultural business, a deal that could value the business at up to $12 billion, a person familiar with the matter said. If confidence wanes in the ability of highly indebted companies to refinance principal payments, a major crisis can suddenly be precipitated, ‘ explains Hunter Hillcoat, an analyst at Investec Securities.
In August, industrial profits in China fell at their fastest year-on-year pace in nearly four years. The biggest consumer of commodities is struggling with excess capacity, sluggish investment and weaker manufacturing.
S&P affirmed Glencore’s BBB rating and kept a negative outlook, also citing worries over economic slowdown in China and copper prices.
Meanwhile, forecasts were pointing to a likely shrinking of the country’s giant factory sector for the second month in a row, when the latest official purchasing managers index is released later this week.
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Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.
