Fitch downgrades troubled Singapore-listed Noble

Key Points
  • Fitch Ratings downgraded Singapore-listed Noble Group to "CCC" from "B-."
  • Fitch said it was concerned about poor liquidity and weak profitability at the struggling commodity trader.
Noble Group
Nicky Loh | Bloomberg | Getty Images

Fitch Ratings has issued a widespread downgrade to Noble Group, as poor liquidity and weak profitability continue to hinder the turnaround of the struggling commodities trader.

Fitch downgraded Noble's Long-Term Foreign-Currency Issuer Default Rating (IDR) to "CCC" from "B-."

At the same time, the agency downgraded Noble's senior unsecured rating and the ratings on all its outstanding senior unsecured notes to "CCC" from "B-."

"The downgrade follows continued uncertainty regarding Noble's funding capacity and how this will affect its operation at its current business scale," the agency said in a statement on Monday.

Fitch stopped short of endorsing Noble's recent effort to extend a key, $2 billion dollar revolving credit facility by 120 days from June 20th 2017.

"The short extension time presents a lack of visibility of the stability of the company's funding structure in the medium term," Fitch said.

Noble Group, once Asia's largest commodities trader, has been hit hard by the recent commodity price collapse. The firm has been forced to sell or write down assets and cut costs to boost liquidity. It is still looking for a strategic investor to provide it with a viable pathway forward.

Noble didn't immediately respond to CNBC's emailed request for comment.

In May, rival credit rating agency Moody's cut Noble to "Caa1," from "B2," citing concerns over weak operating cash flow and large debt maturities over the coming year. It kept a negative outlook.

S&P also cut Noble's rating last month, to "CCC+" from "B+," with a negative outlook, saying the company's capital structure wasn't sustainable.

Positive Developments

Despite the setback, Noble Group had a significant windfall last week. Shares surged as a new substantial shareholder, Abu Dhabi fund Goldilocks Investment Co., built up a 5 percent stake in the firm over two days.

Goldilocks bought 15.5 million shares on Monday, June 19th, and a further 50.5 million shares on Tuesday, June 20.

Noble Group shares ended 16.48 percent higher on Friday at 0.53 Singapore cents.

While Noble has been working to sell part of the group or its assets to push ahead with its transformation and restructuring, Fitch warned that it does not expect a meaningful recovery of Noble's profit generation in 2017.

"It will only become clearer whether Noble's business profile is sustainable after it has completed and implemented its strategic review plans to rationalize the businesses and seek strategic investors; and after working out new terms with its bankers," the agency said.

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