Noble Group Obtains $3 Bln Credit Facilities, Q1 Profit Falls
Noble Group finalized $3 billion in bank credit facilities, a crucial move for Asia's biggest commodity trader to refinance all of its debt for this year after being whacked by credit rating downgrades.
It reported a 62 percent fall in quarterly net profit, hit by tight credit conditions.
Noble is trying to shore up investor confidence following Standard & Poor's and Moody's (MCO) cutting its ratings to junk but the company could end up paying one of the highest interest rates in its existence, Reuters has reported.
"The group's focus on liquidity limited the trading opportunities of our businesses during the quarter, particularly oil liquids and gas and power," Noble CEO Yusuf Alireza said in a statement.
"These facilities address substantially all of our remaining 2016 debt," he said.
The latest credit facilities include $1 billion in an unsecured 364 day revolving loan facility, a transaction which was supported by 25 banks, Noble said.
Noble will be paying an interest rate of 225 basis points over the U.S. dollar Libor on the loan, more than twice the 85 basis points it paid just a year ago, sources told Reuters.
The interest rate will be the highest for a one-year loan in Noble's history in Asia, according to Thomson Reuters LPC. Noble did not provide details of interest rates.
It also announced a $2 billion credit facility which allows for the issuance of trade finance instruments such as letters of credit, as well as for loans.
The Singapore-listed company reported a net profit of $40.5 million in the three months to March 31 from $106.6 million a year ago on a 32 percent fall in revenue to $11.39 billion.
The commodity merchant hit the spotlight in February 2015 when it was accused by Iceberg Research of overstating its assets by billions of dollars, claims which Noble has rejected.
Hit by the worst rout in commodity markets in decades, Noble's Alireza has steered the company to sell assets, cut business lines and taken big writedowns.
The focus on short-term debt and secured financing is increasing Noble's risk profile and could reduce its financial flexibility, rating agency Fitch said last week when it placed the company on watch for a potential downgrade to junk.
In February, Noble reported its first annual loss since 1998, battered by a $1.2 billion writedown for weak coal prices.
(Reporting by Anshuman Daga; Editing by Marius Zaharia)
(Reporting by Anshuman Daga; Editing by Marius Zaharia)
