[SINGAPORE] Noble Group is set to clinch about US$3 billion in bank credit facilities, sources close to the matter said, but it will have to offer the highest interest rate it has ever paid as lenders are wary after its ratings downgrades to junk status.
Obtaining the credit facilities will allow Noble, Asia's biggest commodity trader, to vault the last refinancing hurdle it faces this year and help regain investor confidence following a US$1.2 billion writedown that pushed it last year into its first annual net loss since 1998.
Noble is set to pay an interest of 225 basis points over the US dollar Libor rate on the US$1 billion one-year unsecured loan portion of the deal, more than twice the 85 basis points above Libor it paid just a year ago, said the sources. The latest interest rate will be the highest in Noble's history in Asia.
Noble is also set to seal an agreement for a credit facility of about US$2 billion backed by its trade flows and inventories, with an announcement expected as early as this week, said the sources, who declined to be identified as lending discussions are not public. Noble reports results on Thursday.
The sources said the number of lead arrangers on the unsecured loan declined to eight banks from 15 last year, a further sign that the market is still cautious about Noble, which has been hit by a bruising accounting dispute last year and a rout in the commodities market.
Trade finance heavyweights such as Societe Generale , Mitsubishi UFJ Financial Group, ING and HSBC are among the lead arrangers on the transaction. The banks declined to comment.
Noble declined to comment on its credit facilities. Reuters had previously reported that the company had started discussions over the credit facilities.
As recently as December, Noble was an investment-grade credit before Standard & Poor's and Moody's cut its ratings to junk and followed up with more downgrades in February. The company, headquartered in Hong Kong but listed in Singapore, is one of the world's biggest traders of commodities from coal to iron ore to oil.
On Friday, Fitch Ratings placed Noble on watch for a potential downgrade, which would also take the firm's ratings to junk, triggering a 14 per cent fall in its shares on Monday. The shares slumped 65 per cent last year.