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Fitch expects 50% credit for Noble's hybrid securities

June 18, 2014

ENP Newswire - 18 June 2014

Release date- 17062014 - FITCH Ratings said Hong Kong-based and Singapore-listed commodity player Noble Group's proposed hybrid capital securities will likely receive 50 per cent equity credit and will not affect the company's Issuer Default Rating of BBB- with Stable Outlook.

'We expect 50 per cent equity credit for the securities, as any coupons deferred are cumulative,' the ratings agency said yesterday. 'This is in accordance with Fitch's 'Treatment and Notching of Hybrids in Nonfinancial Corporate & Reit Credit Analysis' criteria. We believe the securities would have a perpetual effective maturity, given the language on replacement intent in the instruments' indenture. The step-up to a cumulative 100 basis points, on and after 25 years following the issue date, would have set the effective maturity date on the reset date in 2039.'

However, Fitch added that due to the expectation that the instrument will remain outstanding or will be replaced by a similar instrument, such effective maturity date is rendered irrelevant. Therefore, the proposed securities' 50 per cent equity credit will remain in effect until they are replaced.

The proposed securities will be used to refinance the repurchase of the US$350 million 8.5 per cent hybrid capital securities issued on Nov 1, 2010. Fitch has accorded no equity credit to the existing US$350 million capital securities. Following the replacement of the existing US$350 million capital securities with the proposed securities, there will be a slight decrease in overall debt level on the assumption that the securities will receive 50 per cent equity credit.

'This change has immaterial effect on the company's leverage level, as we expect Noble to achieve significant deleveraging through its sale of a 51 per cent stake in Noble Agri Limited, a wholly owned agriculture subsidiary, to China'sCOFCO Corporation announced on April 2, 2014,' Fitch added.


Ms. Rebecca Fung

Noble Group Limited

Tel: +852 2861 4625


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Source: ENP Newswire

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