Moody's Investors Service has placed on review for downgrade the Baa3 issuer rating and senior unsecured bond rating of Noble Group Limited and the provisional (P) Baa3 rating on its MTN program. According to the rating agency, the rating review is triggered by Noble’s weakerthan-expected liquidity profile and its still-high leverage in its recent 3Q15 results announcement.

Moody’s said it is also concerned that the negative industry environment will continue to have an adverse effect on the company's liquidity profile and operations. However in a Bloomberg report, Noble said that it is confident of meeting Moody’s; the company had earlier said in the results teleconference that a potential downgrade would be insignificant in terms of additional margin needed – this could be around US$100-200m. We currently have a HOLD on the stock with a fair value of S$0.54, but we will be watching the development closely and will adjust accordingly.

Source: OCBC Research - 18 Nov 2015