Com­mod­ity trader in talks with banks on new bor­row­ing base

New Straits Times - - Business -

would again fea­ture a cash draw down com­po­nent,” said No­ble.

Short-term fi­nanc­ing is the life­line of trad­ing houses which op­er­ate on thin mar­gins and rely on such fund­ing to sup­port their work­ing cap­i­tal needs.

For No­ble, ob­tain­ing such fi­nanc­ing has be­come chal­leng­ing due to its weak op­er­at­ing per­for­mance.

“The June re­fi­nanc­ing was para­mount to the com­pany,” said An­drew DeVries, an an­a­lyst at Cred­itSights, adding a bank would nor­mally be com­fort­able loan­ing US$600 mil­lion to US$700 mil­lion on a se­cured ba­sis be­cause No­ble’s trad­ing book and in­ven­tory are worth US$4.6 bil­lion.

“How­ever, the re­cent drop in the stock and bonds com­bined with a Moody’s down­grade was enough to scare a lot of banks away from fur­ther No­ble busi­ness, re­gard­less of col­lat­eral value,” said New York-based DeVries.

No­ble has lurched from one cri­sis to an­other since it hit the spot­light in Fe­bru­ary 2015 when Ice­berg Re­search ac­cused it of over­stat­ing its com­mod­ity con­tracts by bil­lions of dol­lars as it bat­tled a com­modi­ties down­turn.

That sparked a share price col­lapse, write­downs and debt down­grades to junk sta­tus.

No­ble’s shares slumped by as much as 57 per cent to the low­est in 15 years and its bonds due 2022 lost half of their value. Reuters


No­ble shares have slumped 57 per cent to the low­est in 15 years and its bonds due 2022 have lost half their value.

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