JPMorgan ups Glencore rating after debt-reduction plan

8th Sep 2015 11:17

(ShareCast News) - JPMorgan Cazenove upgraded Glencore to 'neutral' from 'underweight' and lifted its price target to 150p from 130p.It said the miner's debt-reduction measures announced on Monday broadly address concerns over the sustainability of the investment grade credit rating.The bank now estimates a more modest shortfall of around $3bn against S&P's 'BBB' metrics which would be eliminated with a 2.5% increase in commodity prices, although any downward move in spot prices would see pressure re-emerge.Last Thursday, ratings agency Standard & Poor's cut its outlook on Glencore to 'negative' from 'stable' as it downgraded its forecasts for metals on the back of uncertainty over China, but kept its corporate rating at 'BBB'.JPM said a number of the initiatives outlined on Monday, including working capital reduction and reducing long-term receivables, were already captured in the bank's forecasts.It estimated a $4.7bn improvement against its previous net debt forecast, or around $5.6bn on a constant price basis, driven by the proposed and underwritten $2.5bn equity raising and $2.0bn of targeted asset sales.At 1123 BST, Glencore shares were up 2.3% at 134.85p.