Noble Group - OCBC Investment 2016-05-18: Fitch cuts credit rating to junk

Noble Group - OCBC Investment 2016-05-18: Fitch cuts credit rating to junk NOBLE GROUP LIMITED N21.SI 

Noble: Fitch cuts credit rating to junk 

  • Noble Group saw its credit rating cut by Fitch Ratings to junk status, or BB+ from BBB-, with the rating agency noting that the commodity trader’s weakening debt maturity profile is “no longer consistent with an investment grade rating”. 
  • In particular, Fitch was concerned about the shifting of Noble’ debt structure towards shorter-term financing to complement its asset-light business model. 
  • However, Fitch has maintained “stable outlook” for Noble, which reflects Noble’s continuous improvements in its balance sheet and commitment to maintaining sufficient liquidity to cover working capital needs. 
  • Lastly, Fitch notes that a repayment of US$1.6b of debt in May could temporarily reduce liquidity headroom; but it could be partially mitigated by a potential drawdown from its newly signed US$2b borrowing base facilities, and “will increase the post-realisation of planned equity placement and non-core asset sales”. 
  • We currently have a HOLD on the stock with S$0.34 fair value; we prefer to engage at S$0.30 or better.




Carey Wong CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-05-18
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 0.34 Same 0.34


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