S&P downgrades Noble Group credit rating

S&P Global has downgraded commodity trader Noble Group due to lingering concerns about its balance sheet, profit and cash flow amid the extreme volatility of its market.

Noble, Asia's biggest commodity trader by revenue and a big rival of FTSE 100 giant Glencore, in May completed a refinancing with $3bn of new revolving loan facilities.

The company's refinancing followed downgrading to 'junk' status by S&P and other major credit ratings agencies this year, which has made its borrowing more expensive.

On 3 June Singapore-based Noble proposed a further US$500m fully underwritten rights issue.

But S&P said it felt the company's liquidity position has weakened as a result of shorter tenors and higher funding cost, in its view, "which reflects banks' more negative stance toward the company".

S&P credit analyst Danny Huang said he had revised his liquidity assessment of Noble to "less than adequate" from "adequate", noting that the new loan facilities are short-term in nature, with a maturity of 364 days.

As a result, the long-term corporate credit rating on Noble was cut to 'B+' from 'BB-' and the issue rating on the company's outstanding notes to 'B' from 'B+'.

"The negative outlook reflects the elevated refinancing risk over the next 12 months and risks to the sustainability of Noble's profit and cash flow generation amid heightened volatility in the commodities market," S&P added.