Noble Group

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**S&P downgrades Noble Group further into junk, says capital structure “is not sustainable”

On FT, the words have changed from "To buy requires lots of faith from even the hardiest contrarian. Neither confidence nor contrarianism is merited by Noble’s strategy".

to
Noble Group investors brace for heavy losses as bond prices fall
liquidation of Noble Group,
restructuring event of Noble Group

“At 44 cents on the dollar against a combined $4.6 billion trading and inventory book, I would rather take my chances on an orderly liquidation rather than have new secured debt be issued that allows management to continue burning cash each quarter,” Andy DeVries at CreditSights told the FT.
https://www.ft.com/content/64517528-3ef8...f963e998b2

I would think Algos will make money on this counter, Noble creates so much keywords.
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The reason for today share price "tumble". 

Updated hot stock: Noble halts trading after tumbling on reports of Sinochem's withdrawal, S&P's warning
23 May 2017 09:22
By Angela Tan

NOBLE Group has requested for an immediate halt in the trading of its shares after they tumbled when the stock market opened on Tuesday, a day after Reuters reported that China's state-owned Sinochem was no longer interested in investing in the commodity group due to concerns over its finances and business outlook.
Source: Business Times Breaking News
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(23-05-2017, 05:07 AM)realanalyst Wrote: **S&P downgrades Noble Group further into junk, says capital structure “is not sustainable”

On FT, the words have changed from  "To buy requires lots of faith from even the hardiest contrarian. Neither confidence nor contrarianism is merited by Noble’s strategy".

to
Noble Group investors brace for heavy losses as bond prices fall
liquidation of Noble Group,
restructuring event of Noble Group

“At 44 cents on the dollar against a combined $4.6 billion trading and inventory book, I would rather take my chances on an orderly liquidation rather than have new secured debt be issued that allows management to continue burning cash each quarter,” Andy DeVries at CreditSights told the FT.
https://www.ft.com/content/64517528-3ef8...f963e998b2

I would think Algos will make money on this counter, Noble creates so much keywords.


I don't think their creditors are going to get back much because their "trading and inventory book" isn't going to be worth anywhere near 4.6b, this is Enron level accounting, the company is worth nothing.
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Maybe there would be ramifications if Noble were to go down. Which banks are giving out the loans if any?

- NV
Winston Churchill:-
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
"The farther backward you can look, the farther forward you are likely to see."
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Need to recapitalize through Right or placementsof shares .
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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We might be witnessing a "massive fear" of the market, either true or imaginary.  Tongue  

Noble Group `fighting for its life' as S&P sees default risk

http://www.theedgemarkets.com.sg/noble-g...fault-risk
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https://www.bloomberg.com/gadfly/article...-knows-why

If you owe the bank $100, that's your problem, according to a maxim attributed to famed old commodities player John Paul Getty -- but if you owe $100 million, that's the bank's problem.

That's a rare bit of good news for Noble Group Ltd., whose shares and bonds have been plunging after S&P Global Ratings warned the company may default on its debt within a year. Noble's rotten business model may lead to its demise in the long term -- but in the short term, its lenders have more to gain from forgiveness than rigidity.

"The company's capital structure is not sustainable," S&P analysts led by Danny Huang wrote Monday, adding that there's a "risk of nonpayment of its debt obligations due to weakened access to funding."
Sinking Ship

Credit and equity markets agree. The shares Tuesday slid as much as 32 percent, hitting their lowest level since 2001, before being suspended. Yields on Noble's 6.75 percent bonds due in 2020 surged to about 48 percent as the price on the securities dropped to 42 cents on the dollar, while its 8.75 percent 2022 debentures issued in March are commanding 35 percent.

That sounds bad until you consider: A 48 percent yield looks pretty attractive, unless there's zero possibility of recovering your principal.

The odds of such a positive outcome aren't as bad as they might appear. For all Noble's travails, its liquidity looks about as strong now as it's ever been.
Look on the Bright Side
Noble's liquidity is looking stronger than it has for many years
Source: Bloomberg

The cash ratio and quick ratio (measuring its ability to fund short-term liabilities out of cash and cash plus receivables, respectively) are still short of 1, but that's normal for a commodities trader that holds a large volume of easily marketed inventory. The better guide is the current ratio, which at 1.9 is higher than it's been at any point over the past 10 years.

Noble has some major debts coming due over the next 12 months, according to S&P: A $620 million borrowing-base facility used as trade finance that matures next month, $379 million in bonds coming due in March 2018, and $1.1 billion in revolving credit facilities that run out in May 2018. On the other hand, it also has $1.55 billion in cash and equivalents, $2.06 billion in receivables, and $1.77 billion in inventories. Liquidating those to meet loan repayments may be drastic, but it shows there's a narrow path to survivability.
Security Blanket
Commodity traders like long-term unsecured finance. Noble has more of it now
Source: Company reports

That's no endorsement of Noble's long-term health. Any new banking facilities are likely to come at higher interest rates than the existing ones, further weighing on a cost structure that's already out of control. Improving commodity prices may also pose a problem: Higher prices raise the cost of funding a cargo, pushing Noble harder against the limits of its borrowings. A company's viability is under threat unless it can generate positive operating cash flows, and that objective has mostly eluded Noble in recent years.
The Incredible Shrinking Trader

Still, commodity traders are famous for their ability to run on little more than a contacts book and an internet connection. While there are assets left to match Noble's pile of liabilities, its lenders have little to gain from pushing it into default.

The banks may be keeping this trader on life support -- but that doesn't mean they're about to pull the plug.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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Noble Energy not connected to troubled Noble Group, it says

http://cyprus-mail.com/2017/05/23/noble-...roup-says/<<

oble Energy said on Tuesday it was not connected to the Noble Group, which is currently said to be serious financial difficulties.

“Local media groups are reporting on possible financial problems Noble Group is facing,” a statement from Noble Energy said.

“To avoid any possible misunderstandings due to the similarity of our names, Noble Energy Inc. would like to note that it is not related in any way to Noble Group. Any reports that suggest Noble Group is the same company that is operating in Cyprus EEZ is incorrect. Any implications concerning the financial situation of Noble Energy, Inc. based on Noble Group are also incorrect”

According to international reports, the Noble Group has struggled to repair investor confidence after setbacks in the past two years that included a questioning of its accounts by Iceberg Research and a commodities downturn that triggered a share price collapse, credit rating downgrades and a series of writedowns, asset sales and fund raising.
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Why they have required the SGX to halt trading yesterday only after 25 minutes of trading ?, I think it's a rookie mistake from Noble to try to stop the action and not to give a chance for those who wants to buy when the high frequency algo have sold the counter.
suspicious and only teilling to sr. traders to resume the interupted price drop if they are to stop the session each time the share tanks like blood for sharks.
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http://infopub.sgx.com/FileOpen/Response...eID=455058

Quote:The Company has previously announced it is in talks with various potential strategic parties, and has
informed the market that no assurance can be given that any discussion will result in a transaction. Such
discussions are ongoing.
As indicated on the Company’s earnings call of 11 May 2017, the Company has mandated Moelis &
Company and Morgan Stanley to review strategic alternatives. In addition, the Company continues to
right size businesses and to evaluate further asset sales.
The Company is aware that the Reuters article of 22 May 2017 entitled “Sinochem no longer pursuing
stake buy in Noble Group - sources” (“the Article”) has indicated the reasons for any transaction not
proceeding were commercial concerns about Noble.
Noble is not aware of any reason that would confirm what the Article reports.
The Company is also aware that S&P Global Ratings announced yesterday that they will downgrade the
Company’s corporate credit rating to CCC+ and the issue rating to CCC.

It took them more than 20hrs to come out with the above response. Tongue
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