Noble pushes back after Moody's rating downgrade

Singapore

NOBLE Group Ltd pushed back after a two-level downgrade by Moody's Investors Service, with the commodity trader saying that a planned sale of a US energy unit was progressing well and efforts to cut costs and debt were making headway. Bond prices fell, while shares rose.

"We remain on track to reposition the company as an asset-light supply chain manager with high-returning businesses," spokesman Stephen Brown said on Tuesday after Moody's announcement the day before. "Efforts to improve liquidity and further deleverage continue through the completed US$500 million rights issue, the well-progressed sale of Noble Americas Energy Solutions and other capital initiatives and cost-cutting measures."

Moody's move contrasted with an assessment from Fitch Ratings Ltd hours before that Noble's liquidity crunch may be temporary.

"Given the company's limited ability to generate positive operating cash flow and the large debt maturities in the second quarter of 2017, the company's liquidity could come under further pressure over the next 12 months, despite the US$500 million in proceeds from its equity rights offering," said Moody's senior credit officer Joe Morrison.

Moody's downgrade to B2 brings the rating five steps below investment grade. That compares with the BB+ rating by Fitch, which is one notch under investment level. Fitch said on Monday that Noble will probably generate US$900 million in the coming months, including from the rights issue. The fund-raising was supported by shareholders, including China's sovereign wealth fund.

Noble's 2020 notes fell for a second day, losing 1.7 US cents to 77.3 US cents on the dollar for a yield of 15.5 per cent as of 5.20pm in Hong Kong. The Singapore-listed shares, which fell to the lowest since 2003 this month before the rights shares began trading, closed 2.8 per cent higher at S$0.147. BLOOMBERG