Noble Group Ltd.’s crisis deepened on Tuesday after S&P Global Ratings flagged the risk that the embattled commodity trader may default on its debt, triggering a 36-minute slump in the company’s shares, an exchange query, and a trading halt ahead of an announcement.
“The negative outlook on Noble reflects the potential that the company will face distress and a non-payment of its debt obligations over the next 12 months,” S&P said in a
statement late on Monday as it cut the company’s ratings by three steps to CCC+. On Tuesday, the shares plunged as much as 32 percent to 40 Singapore cents, and were at 42 cents as the halt kicked in.
Noble Group declined to comment on S&P’s assessment in response to a request from Bloomberg News.
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The Hong-Kong based trader’s troubles are deepening after two turbulent years that have been marked by
losses, asset sales, and accusations of improper accounting that it has denied. Since surprising investors two weeks ago with a quarterly loss, the shares have tumbled to multiyear lows and the price of its bonds has fallen by more than half. S&P’s warning follows downgrades from Moody’s Investors Service and
Fitch Ratings Ltd. in recent days.
“We downgraded Noble because we believe the company’s capital structure is not sustainable,” S&P said. The “refinancing of its large upcoming maturities will depend on the willingness of its lenders and counterparties,” it said.
On Monday, the
shares lost 6.4 percent in Singapore before the S&P downgrade, and its bonds fell as Reuters reported Sinochem Group is no longer pursuing an investment. On Tuesday, the 2018 notes dropped 4.3 cents to 52.3 cents on the dollar as of 11:30 a.m. in Hong Kong, after an 8.1 cent slump a day earlier, according to Bloomberg-compiled prices.