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Wednesday, May 24, 2017

Noble Group ‘fighting for its life’ as S&P sees default risk

Wednesday, 24 May 2017

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 shares before they were suspended in Singapore ahead of a company statement.

The 2020 bonds fell to a record low.

“Noble is fighting for its life now,” said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group Ltd, who’s been covering Noble Group since 2008 and has been underweight on the bonds since 2015. “We’re not sure how long it can sustain without a white knight.”

Noble Group declined to comment on S&P’s assessment in response to a request from Bloomberg News.

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 multi-year 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 in recent days.

There’s “potential that the company will face distress and a non-payment of its debt obligations over the next 12 months,” S&P said in a statement late Monday as it cut the company’s ratings by three steps to CCC+. “The company’s capital structure is not sustainable,” S&P said.

The shares plunged as much as 32% to 40 Singapore cents, and were at 42 cents as the halt kicked in after just 36 minutes of trade yesterday morning.

The stock has lost 75% this year, following a 44% drop in 2016 and 65% plunge the year before. The company’s 2020 bonds sank to an unprecedented 39.4 cents on the dollar. – Bloomberg


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