S&P is not convinced of its liquidity status.
Noble Group’s long-drawn crisis took another turn for the worse after Standard and Poor’s downgraded its credit rating to junk on January 7.
S&P said that Noble’s liquidity is below what it expects for a "strong" liquidity position, despite the sale of its agricultural unit.
“In our view, the company's credit standing in the capital markets and with lenders has weakened, reflected in its depressed securities prices,” said S&P.
S&P added that Noble’s outlook remains negative as commodity prices remain depressed.
“The current depressed commodity markets and heightened risk aversion by lenders could complicate the company's fund raising plans for the next few months, in our view. In addition, we believe the company's earnings and cash flow visibility is limited and there could be heightened downside risks to our base-line expectation as the commodities industry downturn looks to be prolonged,” said S&P.
In response, Noble asserted that once the proposed Noble Agri deal closes, its rating metrics will substantially exceed those required of an investment grade credit.
“We remain confident that the deal will be approved by our shareholders and will close before the end of February. The change in our investment grade status is not expected to have a material impact on the Group's operations,” Noble said.
S&P’s decision comes hot on the heels of a similar ratings cut by Moody’s Investor Service, which revoked Noble’s investment grade status in the last week of December.
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