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Fitch Lowers Noble Group Rating

Posted by November 17, 2017

Fitch Ratings cut commodity trader Noble Group (NOBGF)'s debt rating on Friday to two notches above default, citing the company's commencement of discussions on a debt restructuring.
 
The agency lowered the rating by a notch to 'CC', which according to its rating criteria defines a situation where "default of some kind appears probable". Fitch previously had rated Noble 'CCC', which stated that "default is a real possibility".
 
Noble has started talks with stakeholders to restructure its debt and secure trade finances in a bid to keep its business running, just weeks after it agreed to sell some assets and flagged a massive loss.
 
Its bonds are already trading at distressed levels and its most recently sold bonds, those due in 2022, have fallen to a third of their issue price in less than nine months.
 
Rival Moody's (MCO) has a 'Caa3' rating on Noble, with a negative outlook. The rating reflects a significant probability of default within the next 12 months, Moody's has said.
 
And S&P Global has assigned a 'CCC-minus' rating with a negative outlook on Noble.
 
Noble, once a global commodity trader with ambitions to rival the likes of Glencore (GLCNF) or Vitol, has shrunk to an Asian-centric company focused largely on coal and freight trading after a crisis-wracked two years that have forced it to slash jobs and sell assets.
 
Hong Kong-based Noble was plunged into crisis in 2015 when Iceberg Research questioned its accounts. Noble stood by its accounts but a commodities downturn added to the turmoil, triggering a share price collapse, credit downgrades, writedowns and management changes.
 
Fitch said the company's liquidity situation was tight at the end of the last quarter as it had $262 million in unrestricted cash and $800 million in undrawn credit facilities against its $1.7 billion short-term debt.
 
Noble has two large tranches of debt maturing in 2018: $400 million of US-dollar notes due in March and $1.1 billion of unsecured revolving credit facilities and term loans due in May.
 
Beyond that the company has two global bonds aggregating $2 billion due in 2020 and 2022.
 

"It is unclear how Noble will address these maturities without a change to its capital structure, given the uncertainties regarding the profit generation of its operations...," Fitch said.

 

Reporting by Umesh Desai 

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