Noble climbs even as Moody's flags US$900 mil funding gap

(May 16): After a savage three-day sell-off, Noble Group shares climbed on Tuesday even as Moody’s Investors Service joined S&P Global Ratings in highlighting the embattled commodity trader’s finances, saying that estimated liquidity isn’t sufficient to cover debt due by mid-2018.

Moody’s said that while the liquidity headroom, including cash and unused committed facilities, was US$2.4 billion ($3.4 billion) at end of the first quarter, it’s since dropped. “After paying down US$650 million in bank debt and the maturity of a revolving credit facility in early May 2017, the headroom would have narrowed to US$1.2 billion and become insufficient to cover the US$2.1 billion in debt due,” it said in a statement as it cut Noble Group’s rating further into junk territory.

The Hong Kong-based trader is facing mounting difficulties after reporting a quarterly loss of almost US$130 million last week and saying it won’t return to profitability until at least 2018-2019. The company has faced years of setbacks, marked by losses, asset sales, and credit-rating downgrades, and has directed new Chairman Paul Brough to review its strategic options. S&P Global Ratings said last week that the Singapore-listed company’s debt-load is unsustainable given its current earnings path.

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