Noble said to be planning biggest ever loan backed by inventories

Hong Kong

NOBLE Group Ltd, the embattled commodity trader, is working on its largest ever loan backed by inventories as banks demand more security, forcing a dramatic overhaul in the way it borrows.

The Hong Kong-based company is seeking US$2.5 billion in a so-called borrowing base facility guaranteed by oil, with the potential to increase the final size to US$3.25 billion if commodity prices rise over the next year, according to people familiar with the deal who asked not to be named because the talks are private.

The financing, already employed by most of Noble's competitors, signals that banks are still willing to support the junk-rated commodities trader…