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Glencore's Glasenberg wins lenders over

London - Glencore's [JSE:GLN] chief executive officer Ivan Glasenberg won a vote of confidence from lenders that he can steer the mining company through a dismal market and restore it to financial stability.

Glencore shares rallied to a three-month high after the firm signed new loan commitments to replace an existing $8.45bn revolving credit facility. It received commitments for $8.4bn in the first phase of syndication, an increase of almost $3bn above existing levels from 37 senior banks, according to a statement on Wednesday.

The company signed for $7.7bn and plans to broaden the refinancing through a general syndication to about 30 additional banks in the second quarter.

The refinancing from Glencore’s lenders is a sign of the company’s strength amid a downturn in prices that’s already forced it to scrap the dividend, sell $2.5bn of new shares and dispose of assets to raise funds. It also comes after Standard & Poor’s cut Glencore’s credit rating to the lowest investment grade earlier this month after lowering its commodity price forecasts.

It’s “a positive development from the company, and whilst not finalised it is encouraging that there remains healthy demand to lend to Glencore,” Investec analysts wrote in a note. “However, we would be surprised if the interest payments will be reduced as the commodity environment has worsened and the company’s credit rating is weaker than a year ago.”

Glencore enacted a $13bn debt reduction plan last year to alleviate investor concern about its level of borrowing. The stock plunged 70% in 2015 and the cost of insuring its debt against default surged as commodities from oil to copper collapsed, eroding profits. The Baar, Switzerland-based company will report 2015 earnings on March 1.

Glencore stock rose as much as 10% to 113.50 pence in London, the highest since November. The shares have rallied 52% over the past month.

Glencore’s €1.25bn of 5.25% bonds due March 2017 rose for a fourth day to 100.8 cents on the euro, the longest streak of gains since November, according to data compiled by Bloomberg.

The company’s €750m of 3.375% securities maturing in 2020 also had a fourth day of gains, increasing to 86c on the euro, the highest since December.

The new unsecured facility contains a 12-month extension option and a 12-month borrower’s term-out option, extending the final maturity to May 2018.

The bookrunners on the deal were ABN Amro Group NV, HSBC, ING Groep NV, Bank of Tokyo-Mitsubishi UFJ and Banco Santander SA.

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