Noble Group plummeted after the embattled commodity trader warned of a quarterly loss of as much as US$1.8 billion (S$2.44 billion) and announced more asset sales, with S&P Global Ratings saying the disposals may not be enough, and investors zeroing in on a bond coupon due tomorrow.
The shares sank as much as 49 per cent, while the bonds due in 2020 held near a record low, as the Hong Kong-based company abandoned its ambitions in global commodity trading with the sale of its gas-and-power unit, and planned disposal of its oil-liquids business.
The proceeds may not be sufficient to mitigate underlying losses and offset less favourable access to credit lines, said S&P director of corporate ratings Danny Huang.
Noble Group has been in crisis for more than two years, marked by vast losses, mounting concern it will default and accusations it inflated the value of some contracts, which it has denied.
In an effort to raise funds, placate investors and pay down debt, the company has been selling businesses. With billions of dollars of borrowing outstanding, JPMorgan Chase said in a note that a coupon payment due tomorrow on its 2020 bonds is now a key event to track.
"Noble is becoming a marketing office, and nothing more," said Mr Jean-Francois Lambert, a consultant and former head of global commodity trade finance at HSBC Holdings.
Noble Group shares sank 31.3 per cent to end the day at 39.5 cents, taking its declines this year to 77 per cent. The 2020 bonds traded at 32.5 US cents on the dollar after sinking to a record 32 US cents on Wednesday, according to prices compiled by Bloomberg.
After the close of trade on Wednesday, Noble Group said that it expects a loss of between US$1.7 billion and US$1.8 billion for the quarter to June, which follows a smaller loss in the first quarter.
The company also announced the sale of the gas-and-power unit to rival Mercuria Energy Group for US$248 million.
While S&P kept Noble's CCC+ rating unchanged pending more information about cash flow and liquidity headroom, it flagged concerns.
There's "continuously deteriorating profitability and liquidity constraints", the assessor said. "Management expects that the company's access to liquidity, working capital and trade finance is likely to remain restricted."
BLOOMBERG
