■ Action: GLEN has launched refinancing of its $8.5bn revolving credit facility. Typically this is done in Q2 each year but the company has moved early to dispel ongoing funding concerns. We expect the refinancing to be completed before full year results in March and this will provide liquidity and funding out to 2018. Compared to current bond and CDS levels the market is likely to be surprised by the refinancing terms, in our view.
■ Existing revolver: We provide a debt schedule in Fig 1. The existing $15.3bn syndicated revolving credit facility was signed in June 2015 of which $6.6bn has been drawn. Funds drawn under these facilities bear interest at US$ LIBOR plus 40-45 bps pa. This facility is made up of: an $8.5bn 12 month revolver with a 12 month term-out option and a 12 month extension option (out to May 2017) and a $6.8bn (undrawn) 5 year revolving facility with two 12 month extension options.
■ Investment case: We continue to think the sell-off in H215 was over-done given the underpin to cash flows from the trading business. At current prices we expect the company to generate FCF (ex WC or asset sales) of c$2bn in 2016, similar in size to RIO and BHP despite the market cap being less than a third of the size. It remains the cheapest stock by some way on cash flow metrics with a base/spot 2016E FCF yield of 21/14%. Financial leverage is high, making delivery