S&P downgrades Noble, sees risk of default

SINGAPORE: Noble Group Ltd’s crisis deepened after S&P Global Ratings flagged a risk of default for the commodity trader within a year, triggering a rout in the company’s already-battered shares, an exchange query, and a trading halt before an announcement. Its 2020 bonds plunged to a record.

There’s potential the company would face non-payment of obligations over the next 12 months, said S&P in a statement late on Monday as it cut Noble’s ratings by three steps to “CCC+”.

Yesterday, the shares plunged as much as 32 per cent to S$0.40 (RM1.24) and were at S$0.42 as the halt kicked in after just 36 minutes of trade. The 2020 bonds sank to S$0.397 on the US dollar.

The Hong Kong-based trader’s troubles are deepening after two turbulent years that have been marked by losses, asset sales and accusations of improper accounting that it has denied.

Since surprising investors two weeks ago with a quarterly loss, the shares have tumbled to multiyear lows and the price of its bonds has fallen by more than half. S&P’s warning follows downgrades from Moody’s Investors Service and Fitch Ratings Ltd recently.

“We downgraded Noble because we believe the company’s capital structure is not sustainable,” said S&P.

The “refinancing of its large upcoming maturities will depend on the willingness of its lenders and counter-parties”, it said. Bloomberg

We downgraded Noble because we believe the company’s capital structure is not sustainable.