Noble Group downgraded to junk status: S&P

Noble Group downgraded to junk status: S&P

Embattled trader Noble Group saw its credit rating downgraded to junk status by the Standard & Poor's ratings agency on Thursday, citing its weakening "liquidity position".

Noble's long-term corporate credit rating was lowered to BB+ from BBB-, the ratings agency said.

The trader, a Hong Kong-based firm with strong links to China, has suffered in particular due to sharp falls in commodities prices sparked in part by the economic slowdown in the world's second largest economy, a top consumer of many raw materials.

The move came despite efforts by Noble to strengthen its finances, which included the sale of its agricultural unit last month to a Chinese food company.

At the time, Noble said it would use the proceeds to repay debt, and the deal was seen as a move to ward off junk status.

"We downgraded Noble because the company's liquidity is below what we expect for a strong liquidity position, despite the sale of its agricultural unit," Standard & Poor's credit analyst Cindy Huang said in a statement.

S&P added in the statement: "The current depressed commodities markets and heightened risk aversion by lenders could complicate the company's fund raising plans for the next few months, in our view." Downgrades in credit ratings can affect whether certain institutional investors and mutual funds are allowed to invest in a company's bonds.

Being rated junk is often seen as a major blow as it drives off large numbers of investors who are both unwilling to invest in higher-risk assets, or are unable to because of rules set by their companies or funds.

In a statement released today in response to the rating, Noble Group said it had noted that "while Fitch has reaffirmed Noble's rating, Standard & Poor's has downgraded the company".

It expressed confidence that "once the proposed Noble Agri deal closes, our rating metrics will substantially exceed those required of an investment grade credit."

"We remain confident that the deal will be approved by our shareholders and will close before the end of February."

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