HONG KONG/SINGAPORE Noble Group will have to fork out more than double in interest margin on a $1-billion unsecured loan it is raising with banks, as a fall out of the commodity trader's credit rating downgrades, sources familiar with the matter said.
The Singapore-listed firm has launched a 364-day revolving credit facility, which will pay an interest margin of 225 basis points over LIBOR, compared with 85 basis points interest margin for last year's one-year $1.1 billion loan, said the sources, who declined to be identified as the information is not public.
Noble, which previously said the latest loan would come at a higher price, declined to comment on the story on Tuesday.
A successful raising of Noble's loan, which is not backed by assets, will help it repay part of its debt maturing in May and could reassure investors about its finances following a $1.2-billion writedown on assets and a full-year loss.
Noble, one of the biggest traders of commodities from coal to iron ore to oil, is battling to boost investor confidence after Standard & Poor's and Moody's cut their investment grade ratings on the company to junk, following a bruising accounting dispute and weak markets.
Hong Kong-headquartered Noble has said its overall funding costs were decreasing as it was stepping up low-cost secured lending from banks and cutting capital spending.
Its latest loan comes on top of a $2.5 billion secured financing that it is seeking in the United States from its lenders.
Noble has launched the $1-billion loan into general syndication and the deadline for responses is May 3, the sources said. Previously, the company was said to be looking to raise $1.5 billion in unsecured loans.
Loss-making Noble has mandated eight banks including Societe Generale, MUFG, HSBC and DBS as lead arangers, the sources said.
HSBC and Societe Generale declined to comment. Bank of Tokyo-Mitsubishi UFJ (MUFG) and DBS had no immediate response.
Shares in Noble, which has been grappling with a rout in commodity prices and an attack on its accounting practices, plumbed 12-year lows in January, but have recovered around 40 percent over the past two months.
(Reporting by Chien Mi Wong of LPC and Anshuman Daga in SINGAPORE; Editing by Denny Thomas and Himani Sarkar)
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Updated Date: Apr 06, 2016 03:00 AM