http://www.zerohedge.com/news/2015-12-30/junk-isnt-very-noble-asias-largest-commodity-trader-responds-moodys-downgrade
In mid-August we warned that Noble Group's downgrade to junk by one or more rating agencies, was inevitable, a downgrade which finally took place yesterday when Moody's downgraded the firm from Baa3 to Ba1, keeping it on outlook negative (we expect S&P to follow suit in the next few days).
The reason why the downgrade was "catalytic" for the company is because while one can debate Noble's existing liquidity (recall that in anticipation of just this downgrade, Noble increased its secured revolving trade credit facility to $1.1 billion from $450 million in October), the reality is that the majority of Noble's banking facilities are contingent on retaining an Investment Grade status. As such, it is only a matter of time before a feedback loop of shrinking liquidity collateral calls which prompt asset sales, which force even more collateral calls, until finally the company succumbs to its vast debt load, takes place.
For now, however, Noble refuses to throw in the towel, and overnight released the following statement on the Singapore Exchange where its massively beaten down stock trades:
We haven't seen a new CDS run as of this morning, but judging by where the company's implied default risk was last night (77%), the market isn't holding its breath for Noble management to be proven right.
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