Moody's downgrades Noble after profit warning

Moody's lowers Noble rating after profit warning
Moody's lowers Noble rating after profit warning

Noble Group's woes show no signs of abating after two major credit ratings agencies said they are keeping their eyes peeled on the beleaguered commodities trader after a profit warning on Tuesday.

The Singapore-listed company said it will post a net loss in the fourth quarter and for the full-year 2015, after taking a $1.2 billion hit from adjustments as commodities prices continued to tank.

Moody's Investors Service wasted no time as it downgraded Noble on the same day to Ba3 from Ba1 in the junk category. The ratings agency had cut Noble's investment grade rating in December.

The cuts will likely increase Noble's borrowing costs and make it harder for the trader to refinance debt to shore up its finances.

Moody's cuts Noble to junk credit rating despite Agri deal

Standard and Poor's meanwhile said Tuesday that it views Noble's recent profit warnings as credit negative. It downgraded Noble to junk from investment grade in January.

S&P will assess the full rating impact following Noble's full-year results on Thursday.

"The downgrade reflects the impact of the unexpected assets write-down on Noble's business and financial profile," said Moody's senior credit officer, Joe Morrison.

Moody's estimates the write-downs will increase Noble's adjusted net debt-to-net capitalization to about 58 percent at end-2015 from about 51 percent at end-September 2015.

"The asset impairment significantly heightens uncertainty regarding its ability to achieve adequate profitability and cash flow, given our expectation of a prolonged commodity down-cycle, and the consequent negative impact on its relationships with banks and counterparties," added Morrison.

The rating review reflects concerns regarding progress in resolving its liquidity issue as well as the consequences of the impairment charges, Moody's added.

Although Noble's sale of Noble Agri will improve the company's liquidity profile, its liquidity position will "remain constrained" until it refinances approximately $1.6 billion in bank facilities due in May, the ratings agency said.

S&P downgrades Noble to junk; Fitch keeps investment credit rating

Noble Group is selling the company's stake in Noble Agri to China food giant Cofco for at least $750 million.

The commodities trader has been trying to shore up confidence and improve transparency in its communication after a firm called Iceberg Research published a in February last year alleging that the Singapore-listed trader's accounting treatment was "unusual," resulted in "fabricated" profit that "intentionally misleads credit agencies and investors."

Noble has consistently and vehemently denied the allegations and has taken multiple steps to improve its disclosures to investors, including commissioning an independent review of its accounting from PwC, which found Noble's accounting was in line with international standards.

Shares of Noble Group fell as much as 6.7 percent on Wednesday.

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