Company’s 6.75% notes due 2020 drop to lowest since January
Noble warned Tuesday it will post $130 million quarterly loss
Noble Group Ltd.’s shares plunged the most on record to the lowest level in more than 14 years after it warned of a first-quarter loss and as S&P Global Ratings said the commodity trader’s debt-load is unsustainable given its current earnings path.
Shares of the Hong Kong-based company, which counts China Investment Corp. as one of its largest shareholders, slumped 32 percent to close at 87.5 Singapore cents, the biggest decline on record and the lowest level since October 2002. This has slashed Noble’s market value to less than $1 billion in U.S. dollar terms, a shadow of the $10.2 billion trading behemoth it was in 2010.
Noble said Tuesday it will record a $130 million net loss in the first quarter because of wrong-way bets on coal prices and dwindling liquidity, compared with a profit of $40.5 million a year ago. That’s just the latest in a string of setbacks for Noble, once the largest commodity trader in Asia, which has been selling assets and cutting costs to prop up its finances after a torrid few years marked by losses, credit-rating downgrades and a share-price collapse.
“If you assess their earnings power of the past one year, based on the current profit runway, their debt-load is not sustainable,” said Danny Huang, director of corporate ratings at S&P in Hong Kong, adding that bank support remains important for Noble. “The headline loss of $130 million doesn’t look very good and we have to see what are the reasons for that, even though one would be reasonable not to expect them to report a huge recovery.”