Noble Group saw a 14% plunge in its share price yesterday after news broke that Fitch Ratings Ltd has placed the company’s debt rating on negative watch, with the rating agency saying that Noble now faces less financial flexibility amid a challenging market. Fitch also expects Noble to focus more on short-term and secured financing to cut borrowing costs amid a difficult operating environment.

However, Fitch noted that the negative watch could be resolved when Noble completes the refinancing of its committed bank facilities this month, and also on the announcement of its quarterly results (due Thursday evening).

Noble has previously said that it expects the weighted average cost of debt to remain the same even though the costs of its revolving credit facility appear to be rising. We currently have a HOLD on the stock with a fair value of S$0.39.

Source: OCBC Research - 10 May 2016