Noble Group shares dip as Fitch sees possibility of default

SINGAPORE: Noble Group Ltd shares slid yesterday on the first day of trading 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 per cent as of 12.02pm, here. It earlier fell 7.6 per cent.

Fitch slashed its rating late on 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 per cent 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$2 billion (RM8.58 billion) 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$2 billion borrowing base facilities by 120 days from June 20, does not provide evidence of mediumterm funding stabilisation,” said Fitch on Friday.

The uncertainty surrounding the outcome of the facility may constrain the company’s flexibility in its trading operations, according to Fitch.

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

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