Fitch Affirms Noble Group's Ratings After Agri Deal; Shares Sink

  • Near-term debt maturity seen small at $360 mln in first half
  • Company's shares decline to close at lowest since 2008

Fitch Ratings Ltd. affirmed Noble Group Ltd.’s investment-grade ratings after rival agencies cut the commodity trader to junk, while warning that any sign of deterioration in the company’s ability to access unsecured bank funding could put that assessment in jeopardy. The shares fell to the lowest level since 2008.

The company’s long-term foreign-currency issuer-default rating and senior unsecured rating were both affirmed at BBB-, Fitch said in a statement received on Thursday. That’s the lowest investment-grade rating. The outlook on the Hong Kong-based company’s issuer-default rating is stable, Fitch said.

Noble Group shares have extended losses in 2016 after Standard & Poor’s joined Moody’s Investors Service in cutting its rating below investment grade even after the company agreed to sell the rest of its agricultural unit for at least $750 million to bolster its finances. For Fitch, the affirmations of the ratings were driven by Noble Group’s improved balance sheet after the agri-stake sale, as well as its commitment to cut working capital for the metals business and continued cash-flow generation.

“The affirmations are based on Noble’s ability to maintain adequate access to unsecured, committed bank facilities,” Fitch said in the statement. “Any signs of deterioration of the company’s ability to access unsecured bank funding could result in negative ratings action.”

Shares Sink

Fitch’s assessment didn’t help the shares on Thursday amid a region-wide sell-off. The stock dived 6.2 percent to close at 30.5 Singapore cents, the lowest price in more than seven years. This year, Noble Group’s shares have lost about 24 percent, the second-worst performer on the Straits Times Index.

Noble Group’s one-year credit-default swaps, which act as insurance if the company fails to pay its debt, hit a record 2,600.2 basis points on Wednesday, according to CMA prices. Its bond risk was the highest in Asia, according to data provider CMA.

The company’s “near-term debt maturity is small -- $360 million of notes due in the first half of 2016,” Fitch said. “This can be comfortably covered by Noble’s existing liquidity, including unrestricted cash and cash equivalents and undrawn committed bank facilities.”

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