S&P rates Noble Group notes B

S&P said it assigned a B long-term issue rating and cnB+ long-term Greater China regional scale rating to the proposed dollar-denominated fixed-rate notes to be issued by Noble Group Ltd.

The proceeds will be used to refinance existing debt and for general corporate purposes, the agency said.

The notes constitute direct, general, unconditional, unsubordinated and unsecured obligations of Noble and will at all times rank pari passu and without any preference among themselves, S&P said.

Notable terms include an option to redeem up to 40% of the principal amount of the notes with proceeds from one or more equity offerings, which include public offerings and private placements at any time before 2020, the agency noted.

The company also may redeem the notes in whole, but not in part, from 2020, S&P said.

There are no financial covenants applicable to the notes. There is a negative pledge that Noble will not pledge its assets for any present or future indebtedness in the form of bonds, debentures, notes or other investment securities, the agency said.

The company’s underlying profitability remained weak and is below expectations, largely due to liquidity constraints on operations, S&P said.

The negative outlook reflects the refinancing risks of the company's short-term facilities, the agency said, and potentially weaker financial performance and cash flow generation due to a reduction in credit lines and counterparty support.

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