Embattled Noble Group pays coupon on 2020 bond, say market sources

The payment of about US$40 million to bond holders comes after the trader last week announced asset sales and flagged a quarterly loss of as much as US$1.8 billion.
The payment of about US$40 million to bond holders comes after the trader last week announced asset sales and flagged a quarterly loss of as much as US$1.8 billion.PHOTO: REUTERS

SINGAPORE/HONG KONG (Reuters) - Singapore-listed commodities trader Noble Group has paid the coupon on its 2020 bond, market sources said on Tuesday (Aug 1), helping to reduce worries about the company's immediate ability to service its debt.

The payment of about US$40 million to bondholders comes after Noble last week announced a dramatic overhaul and flagged a quarterly loss of as much as US$1.8 billion.

It also sold its US gas and power business for US$248 million, started a process to sell its oils liquids unit and announced plans for up to US$1 billion of disposals over the next two years.

An external spokeswoman for Noble had no immediate comment on the 2020 bond coupon payment.

Noble's US$1.2 billion bonds due 2020 had a 6.75 perc ent coupon due on July 29. Last month, Noble deferred a payment on its perpetual bonds, triggering a sell-off.

Its next scheduled bond payment is US$7 million for a coupon on its 2018 bonds in September. After that it faces the expiry of a key US$2 billion credit facility in October - a fresh deadline following a four-month extension with creditors.

For now, the market is expected to focus on Noble's quarterly results, due this month, for details on its plans to sell assets and cut its debt of more than US$3 billion.

"The sale of its oil liquids and gas and power assets would raise cash and reduce debt, but the proceeds may not be sufficient to mitigate the underlying losses and less favorable access to credit lines, in our view," S&P Global Ratings said in a statement last week.

Sources close to the company and investors have said the business remains hemmed in by financing constraints - a major issue for trading houses - and has lost many traders, analysts and managers over the past months, despite cash offers to keep key staff until December.

Noble's shares were 12 per cent higher in late morning trade while its 2020 bonds were up about three points at 36.5/37.5 cents on the dollar.

The shares are down 75 per cent this year, shrinking its market value to around US$400 million, compared with US$6 billion in February 2015.

Noble was thrust into the spotlight in February 2015 when previously obscure Iceberg Research accused it of overstating its assets by billions of dollars, which Noble rejected. In 2015, consultants PricewaterhouseCoopers found Noble had complied with international accounting rules.