Noble Group declines as Fitch sees possibility of default

HONG KONG: Noble Group Ltd shares slid after Fitch Ratings cut the embattled commodities trader’s credit rating to a score indicating that a default is possible.

The company’s stock dropped 3.8% as of 12.02pm in Singapore yesterday after a public holiday on Monday. It earlier fell as much as 7.6%. Fitch slashed its rating late Friday by two steps to CCC, its third downgrade since the middle of last month. Fitch’s definition for that rating says it indicates “substantial credit risk” and that “default is a real possibility.”

The moves mark a reversal following a 63% surge in Noble Group’s shares last week, when the company said it remains in talks with potential investors after agreeing with lenders to extend its US$2bil credit facility for four months. The struggle to sustain the rally flags challenges for the company, in which Abu Dhabi fund Goldilocks Investment Co became a major holder last week, as it searches for a strategic investor to restore confidence following a collapse in its shares and bonds this year.

“The extension of Noble’s US$2bil borrowing base facilities by 120 days from June 20, 2017 does not provide evidence of medium-term funding stabilisation,” Fitch said in its statement on Friday. The uncertainty surrounding the outcome of the facility may constrain the com- pany’s flexibility in its trading operations, according to Fitch.

Noble Group didn’t immediately respond to a request for comment yesterday on Fitch’s downgrade.

“We recognize Noble’s effort to sell part of the group or its assets to aid in the restructuring of its business," Fitch said.

“But visibility over the form or success of any transaction is low given current market conditions.” — Bloomberg