S&P Global Ratings and Moody's downgraded Noble Group Ltd. on Aug. 14, citing the company's increased risk of defaulting on its debt obligations.
S&P cited increasing risk that Noble Group will not be able to meet its debt obligations in the next six months.
Noble Group's remaining cash, combined with the potential proceeds from the sale of Noble Americas Gas & Power Corp., is not expected to be sufficient to cover its revolving credit facilities if the company does not turn around and recover from its recent losses or if it fails to secure bank waivers and breaches its financial covenants.
S&P lowered its long-term corporate credit rating on Noble Group to CCC- from CCC+ with a negative outlook. The long-term issue rating on Noble's outstanding senior unsecured notes was decreased to CC from CCC.
Moody's lowered Noble Group's corporate family rating and senior unsecured bond ratings to Caa3 from Caa1, with a negative outlook, citing similar concerns while noting that the outlook results from increased default risk over the next 12 months and the uncertain recovery prospects for creditors.
Both rating agencies underscored Noble Group's weak liquidity, with Moody's indicating that the company's liquidity headroom fell to US$1.4 billion by the end of June from US$2.4 billion at the end of March.
Moody's said the company's rating could be upgraded if it raises enough funds to meet maturing debt and cash outflow from operations over the next 12 months. Both rating agencies warned of further downgrades if Noble Group defaults on payment obligations, if its liquidity worsens or if debt recovery is lower than expected, in case of a default.
Noble Group's losses in the first six months of 2017 ballooned to US$1.88 billion, compared to a loss of US$14.4 million the year before.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.