Reuters: Market News: TEXT-S&P keeps Glencore on watch positive after Viterra acquisition

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TEXT-S&P keeps Glencore on watch positive after Viterra acquisition Mar 26th 2012, 10:29 Mon Mar 26, 2012 6:29am EDT March 26 - Overview -- Global commodities trader and mining company Glencore International PLC (Glencore International AG's holding company) announced it would buy grain handler Viterra Inc. for Canadian dollar 6.1 billion. -- Even though Glencore has agreements to sell some of Viterra's assets to its partners in the deal, we expect Glencore's net debt to increase by a significant $4.3 billion. -- We are maintaining our 'BBB' long-term rating on Glencore International AG on CreditWatch positive. -- The CreditWatch reflects our view that, despite the acquisition of Viterra, Glencore's risk profile will improve after its merger with U.K. mining company Xstrata PLC, which is in the process of gaining shareholder and antitrust approval. Rating Action On March 26, 2012, Standard & Poor's Ratings Services kept its 'BBB' long-term corporate credit rating on Switzerland-based global commodities trader and mining company Glencore International AG on CreditWatch with positive implications, where it was placed on Feb. 8, 2012 following the announcement of the merger of its holding company Glencore International PLC with U.K.-based mining company Xstrata PLC (BBB+/Stable/A-2). Senior unsecured bonds issued or guaranteed by Glencore International AG remain on CreditWatch Positive, where they were placed on Feb 8, 2012. Rationale We are maintaining the positive CreditWatch because we believe that the rating on the company that might be formed by the merger of Glencore and Xstrata is likely to be 'BBB+', despite the additional debt related to the potential Viterra Inc. (BBB-/Watch Dev/--) acquisition. If the merger with Xstrata doesn't go through we will likely affirm the rating on Glencore at 'BBB', even though the financial risk profile of the company is likely to weaken as a result of the Viterra acquisition, and we expect credit ratios to temporarily fall below levels we see as commensurate with our 'BBB' rating. Link this Share this Digg this Email Reprints

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