Noble debt trades like junk with record maturities during rout

[SINGAPORE] Noble Group Ltd, Asia's biggest commodities house, is being punished by traders as it faces record bond maturities and closer scrutiny of earnings amid a global resources rout.

Dollar-denominated notes of the company, which has the lowest investment-grade scores from the three main rating companies, yield more than 400 basis points above Treasuries. That compares with the 313 average for top junk-rated Asian borrowers, Bank of America Merrill Lynch indexes show. The cost to protect the company's notes against non-payment has risen 146 basis points in the last month to 412, the worst performing in Asia and 50 above junk-rated Australian firm Fairfax Media Ltd.

Noble, founded by billionaire Richard Elman in 1986, faces about US$1 billion of debt due this year after posting its first quarterly loss since 2011 as commodity prices approached a six-year low. It denied allegations from an anonymous group called Iceberg Research that it overstated accounting gains, and rejected a demand for unpaid compensation in a lawsuit from its former chief executive.

"The CDS levels indicate the market isn't totally convinced by Noble's rebuttals," Ray Wepener, a proprietary credit trader in Hong Kong at Woori Investment & Securities (HK) Ltd, said by phone on March 13. "The bonds are trading as if they have been downgraded."

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