Singapore 24/02/2016 - Moody's Investors Service has cut Noble Group’s corporate family rating and senior unsecured bond ratings to Ba3 from Ba1 after Noble said it will book $1.2 billion in non-cash asset impairment charges, the ratings agency said on Tuesday.
"The downgrade reflects the impact of the unexpected assets write-down on Noble's business and financial profile," Joe Morrison, Moody's vice president and senior credit officer, said.
The impairment charges are in addition to the expected write-down of more than $500 million related to the sale of its 49-percent stake in Noble Agri.
On Tuesday, Noble said it expects to recognise the impairments in the fourth quarter and will probably post a net loss for the October-December quarter and 2015.
"The asset impairment significantly heightens uncertainty regarding its ability to achieve adequate profitability and cash flow, given our expectation of a prolonged commodity down-cycle, and the consequent negative impact on its relationships with banks and counterparties," Morrison added.
Moody's expects that the first-quarter receipt of $750 million in proceeds from the sale of its Noble Agri stake to improve Noble's liquidity profile but Noble's liquidity position will remain constrained until it refinances approximately $1.6 billion in bank facilities due in May 2016, the agency said.
Noble’s ratings could be further downgraded if there is no material progress in refinancing the bank facilities within the next few weeks, the agency warned.
Moody’s had downgraded the commodity trader's ratings to junk status of Ba1 from Baa3 in December.
Noble's share price fell 5.3 percent to 35.5 Singapore cents ($0.25) so far on Wednesday. Its share price had lost nearly 70 percent over the past year amid plunging commodity prices and liquidity concerns, which saw rating agencies downgrade its bond ratings to junk.
Noble will release its financial results on Thursday.