Cut to junk: Noble says its credit ratings metrics will improve when Agri sale closes

The company logo of Noble Group seen at its office in Hong Kong.
The company logo of Noble Group seen at its office in Hong Kong. PHOTO: REUTERS

SINGAPORE - Embattled Singapore-listed commodity trader Noble Group responded on Wednesday (Dec 30) to the move a day earlier by Moody's Investors Service to downgrade its credit rating to junk status, saying the recent sale of its agricultural unit will improve its ratings metrics when the deal closes.

"We note the action taken by Moody's in downgrading us yesterday, following their recent lowering of ratings across the entire commodity sector.

"Whilst we respect Moody's decision, we are of the firm view that, once the just announced Noble Agri deal closes, our rating metrics will substantially exceed those required of an investment grade credit," Noble said in a statement.

The company added that it was confident the deal will be approved by our shareholders and will close before the end of February.

Noble sold its remaining 49 per cent stake in Noble Agri to Cofco International of China last week for US$750 million (S$1.06 billion) in cash so as to cut debt, shore up its balance sheet and hold onto its investment grade status.

"It is unfortunate that this transaction has seemingly, in our view, been outweighed by Moody's negative view of the commodity producer segment," Noble said on Wednesday.

It added: "As an asset-light supply chain manager, the current environment is opportunity rich and plays to our strengths, while the low price environment substantially reduces the working capital required to support our business."

Noble also noted that it still has investment grade status with the other two major credit rating agencies, Standard & Poor's and Fitch.

It said it will "work with Moody's to ensure that our rating reflects the financial metrics that Noble will attain."