HONG KONG: A four-month credit extension for cash-strapped Noble Group Ltd sent the commodity trader’s shares up almost 11 per cent on Monday, though market watchers cautioned the extension was only temporary respite.
The Singapore-listed firm persuaded banks to extend a $2 billion credit line, due to be rolled over by the end of the week, but was asked to find a strategic investor, a person familiar with the matter said.
Noble declined to comment on the credit line.
Investors applauded the news, pushing Noble’s stock as high as 10.8 per cent in thin Monday trade, before paring gains to 7.7 per cent, at S$0.35.
But that price is in stark contrast to its 2011 peak of about S$17, before a drop in commodity prices and questions over accounting practices sent the stock plummeting.
The trader, which stood by its accounts, surprised investors this year with a first-quarter loss, after which credit-rating firms questioned Noble’s ability to repay debt.
“Any roll over is significant, purely because it allows this company to function for another four months.
But this (the banks) is just one of the different stakeholders,” said trading strategist Nicholas Teo at KGI Securities Singapore. “It doesn’t mean (Noble) is completely clear.”
The commodity trader needs to show stability when reporting its next set of earnings, Teo said.
Noble bonds due in 2022 traded half a point lower at 37/39 cents on the dollar on Monday, while its credit default swaps implied a high default probability of 94 per cent. — Reuters
Oman Observer is now on the WhatsApp channel. Click here
