Noble Group to raise $3bn debt at higher interest rates

According to sources, Noble Group is planning to raise up to $3bn in bank debt as part of its refinancing plan outlined earlier.

Noble could pay an interest rate of 225 basis points over the U.S. dollar Libor on a $1 billion one-year unsecured loan, more than twice the 85 basis points it paid just a year ago.

Further, Noble’s credit facility of about $2 billion would be backed by trade flows and inventories, with an announcement expected this week.

The number of lead arrangers on the unsecured loan was eight banks, which compared with 15 on a loan last year.

According to sources, Societe Generale, Mitsubishi UFJ Financial Group, ING and HSBC were among the lead arrangers on the transaction. 

The debt issuance is part of the company’s Chief Executive Yusuf Alireza’s plan to sell assets, cut business lines and trim debt.

Source:  Reuters

Fitch Ratings downgrades Tata Steel and its UK arm

Ratings agency Fitch downgraded India-based steel manufacturing company Tata Steel Ltd. and its wholly-owned subsidiary Tata Steel UK Holdings on declining profitability and a spike in leverage during FY 2016. It has placed the credit ratings of both entities on Rating Watch Evolving (RWE).

The downgrade reflects uncertainty regarding Tata Steel’s announcement of restructuring its portfolio which includes a potential partial / complete divestment of its UK operations. A partial or a complete exit from the UK operations would be a credit positive for the company, Fitch stated.

Weak demand and overcapacity, along with softening of commodity prices globally, has affected the company. Demand growth in India for nine months ending December 2015 was at 4.7%, met largely by rising imports. However, recent moves by the Indian government to implement a minimum import price followed by a 20% duty on imports has provided some relief to domestic steel producers, but prices have still remained 20% lower than the average for FY-15.

Softening steel prices were evident in Tata Steel’s earnings for the 9M-15 period which saw consolidated EBITDA per tonne decline 35% to about INR 7,400 per tonne from Rs 11,400 per tonne in FY15, hit by a Rs 7,150 per tonne fall in realisation.

Source: Business Standard

Noble Group warns of loss for 2015 on impairments and charges

Hong-Kong based commodity conglomerate Noble Group Ltd. warned that it would post a loss for the 4Q’15 and FY’15 period after facing a $1.2bn non-cash impairment and exceptional charge. Additionally, the company faced a loss on the sale of its subsidiary Noble Agri Ltd.

Noble warned that commodity prices, especially that of thermal coal would continue to remain subdued in the near-term.

The company’s management adopted a conservative price of thermal coal of $55 per tonne to ensure its portfolio cushions itself against lower prices in future. However, prices continue to hover around 2006 lows of $47 per tonne at Newcastle, Australia, an Asian benchmark for thermal coal, for the week ended 22 January.

Lower commodity prices over 2015 have dragged the company’s share prices down over 65% and its credit ratings have been downgraded to junk.

Source: Bloomberg