Noble Group plunged the most in more than four years after ratings agency Fitch placed the company's debt ratings on negative watch as Asia's largest commodity trader was seen facing less financial flexibility amid a challenging market.
The shares sank 14 per cent to 35 cents yesterday, the most since November 2011. The stock bottomed at 27 cents in January after tumbling 65 per cent last year, and swung back to a high this year of 49 cents in March.
Noble is seeking to chart a recovery this year after a savage year in which it posted the first annual loss in almost two decades, had its credit rating cut to junk and saw its shares sink along with a rout in raw material prices.
Moody's and Standard & Poor's had cut the group's rating on liquidity concerns since December last year, and downgraded it further into junk territory two months later. Fitch had said "any significant increase in collateral needs or funding costs could result in negative rating action".
On Friday, Fitch said it expects the trader to focus more on shorter-term and secured financing to cut borrowing costs amid a difficult operating environment that may result in less financial flexibility for the firm.
According to Bloomberg, Ms Margaret Yang, a strategist at CMC Markets, said in a note:"Another potential credit downgrade will have an impact on their ongoing debt refinancing efforts, making it more difficult to roll their debts.
"Fitch reminded the market about the prolonged problems associated with this company."
Fitch said the negative watch will be resolved when Noble completes the refinancing of its committed bank facilities due this month, and on the announcement of its quarterly results. The resolution will also reflect its revised assessment of Noble, including taking into account its focus on short-term debt financing in the future and its improved balance-sheet structure after it repays debt, it said.
While the costs of the group's revolving-credit facility are seen rising, its weighted average cost of debt is expected to remain about the same, Noble chief executive officer Yusuf Alireza said last month.
An external media representative for the company declined to comment on the stock move yesterday.