Glencore International PLC, St. Helier (OTCMKTS:GLNCY) disclosed more details on financing but failed to answer many queries related to its trading operations. In a report released Tuesday after analysts and investors demanded for more details about its trading operations, the company stated that a credit downgrade would yield new costs for the company. It should be noted that the company’s stock plunged almost 29% in single trading session last week.

The update

Glencore reported that a downgrade of two points to junk status would result increase its payments on bonds by as much as 1.25%. Much of the company’s short-term loans cannot be assessed by banks until 2017.

The fact sheet proved to be an important part of communications blitz and helped to support the company’s beaten share price. In yesterday’s trading session, the shares of Glencore surged more than 5% to close the trading session at $3.55. The gains came at a share volume of 1.87 million compared to average share volume of 1.41 million. GLNCY stock has recouped all of its losses recorded last week.

The problems

Some investors have termed Glencore’s trading operations as a “black box” in which the potential perils are impossible to estimate. Their main concern is that a sharp plunge in commodity prices and company’s high debt will force the agencies to opt for a credit-rating downgrade, which can cripple its debt-supported trading operations.

Glencore’s boasts a different business model as compared to other big miners. The company has a vast trading segment that sells and buys other companies products as well as deals in its own production. It in fact ships massive amount of coal on the high seas compared to other companies in the industry. Its traders utilize short-term debt and do not provide any information of what they sell and buy.


Glencore International PLC, St. Helier (OTCMKTS:GLNCY) retained its short term bullishness and rallied sharply for another day to end the last trading session with a gain of 5.34%. The volume of the day 1.8 million was not much higher than the daily average of 1.5 million, reflecting just a normal continuation of the trend. The stock has been in a major downtrend for a long time now and the last phase of the downtrend has been contained in a perfect channel. A breakout of the channel has signaled a short term reversal, which is expected to face supply pressure from the resistance band of $3.50-$4.50.