http://iceberg-research.com/2016/01/07/downgrade-of-noble-group-to-junk-by-credit-agencies/

Noble Group's "Margin Call" Part II: The Enron Moment http://wp.me/p3k7lL-40K

Noble Group, Asia’s top commodity trader, has endured short selling attacks from the likes of Muddy Waters LLC and the anonymous Iceburg Research. With its stock value cut by over ¾ on a year over year basis, and bouncing near all-time lows, along comes a new report from Moody’s calling for a “collateral margin call.”

http://www.valuewalk.com/2016/01/noble-group-margin-call/

来宝危机：昔日亚洲第一大商品贸易商“命悬一线”

文 / 祁月 2016年01月03日 18:40:24 14
昔日亚洲最大大宗商品贸易商来宝集团（Noble Group），如今已沦落为“垃圾级”公司。

穆迪上周二将来宝集团信用评级由最低评级Baa3下调至Ba1，降至垃圾级，违约风险高达70%，前景展望为负。标准普尔上个月也将来宝集团的长期企业信用评级降为BBB-，距垃圾级仅一线之隔。如今，来宝集团已经站上破产的悬崖边缘。

在一些小公司出现违约后，大宗商品价格暴跌对来宝、嘉能可（Glencore）、英美资源（Anglo American）等大宗商品贸易巨头的冲击也相继浮出水面。继嘉能可暂时躲过破产霉运之后，来宝集团拿到了这根“黑色接力棒”。

对于来宝集团来说，头号风险是宏观风险。

尽管来宝集团被降级令人担忧，但这背后反映出的是大宗商品市场的颓靡，更是一种价格下行的趋势演变。据美国财经资讯网站jacquessimon506.wordpress，Banque Cantonale Vaudoise交易部门负责人Sacha Duparc认为，第一轮负面效应反映在宏观经济指标上（比如资本开支下滑）。第一轮负面效应将是大宗商品出口商对政策的反应。这些效应将主导2016年的市场。

第二个风险来自于追加保证金

贸易商们拥有几十亿美元大宗商品预付款。过去一年，由于大宗商品价格大幅下挫，贸易商们用以进行大宗商品贸易融资抵押的库存和应收账款价值录得大笔损失。

同样地，来宝集团用以融资的现货大宗商品抵押物的价值也出现了下跌。即使从未出现不按时偿贷的情况，来宝集团也被一些债权人要求偿还贷款，因为他们认为自己持有的抵押品价值已经没有当初放贷时那么高了。

jacquessimon506.wordpress网站报道称，按照银行的要求，来宝集团需要补增额外的至少价值16亿美元的抵押品，而来宝集团现在却拿不出来。来宝集团极为依赖银行为其主营业务融资。

来宝集团此前出售资产的举动并未能令其避免评级被下调的噩运。来宝集团12月宣布将旗下来宝农业（Noble Agri）51%的股份以7.5亿美元出售给中粮集团。从某种角度来说，这笔交易就是为了避免被降级，但事实证明，此举于事无补。

据《华尔街日报》，来宝集团早前表示，降级将触发1亿至2亿美元的追加保证金要求。尽管这些数额被来宝集团称为“微不足道”的，但是，2亿美元相当于在剥离农业资产之后来宝集团可用现金余额的12%。

据jacquessimon506.wordpress，来宝集团必须筹集资金，但他们的抵押品是建立在45.28亿美元的新的账面价值基础上的，而该公司将大宗商品期货及衍生品合约的公允价值收益直接入账的金额就超过了45亿美元。以任何金融模型来看，这些逐日盯市价值都占到了新的账面价值的90%到105%之间。

此前，来宝集团就被研究公司Iceberg Research指出其夸大商品合约及期货的公允价值，这些公允价值的盈余并没有转化为实际现金盈利。

noble chart 1_0

对于来宝集团这45亿美元公允价值出现损失的假设情况，银行并不提供精准的估算。普华永道无法对这些商品合约及衍生品合同的净公允价值背后的模型和假设开展评估。（下图为截止2015年三季度末，来宝集团未实现的大宗商品期货及衍生品合约公允价值收益）

noble bv share.bmp__0

来宝集团面临的财务困境还不止于此。该公司在截至9月30日的三个月期间净利润同比下降84%，至2470万美元。根据穆迪的数据，9月底来宝集团经调整后的净债务为42亿美元，是其息税折旧及摊销前利润(EBITDA)的3.6倍，经营现金流是负值。来宝在未来12个月有近30亿美元的短期债务必须偿还或再融资。

也就是说，来宝集团被逼到了破产边缘，或者说正深陷自2015年以来未曾面临过的巨大困境当中。

来宝集团面临的是偿债问题，而非流动性

银行从要求来宝集团追加的并非流动性，而是更多抵押品。因为他们明白，这些大宗商品期货和衍生品合约产生的浮盈能兑现的比例不大可能超过10%，因此，它们并不是有效的抵押品。

理论上，在资产价格上升时期，这类公允价值的盈余在合约结算或到期交割后转换成实际的现金盈利，但反之则反。

安然式财务会计信任危机

华尔街见闻提及，一家不知名的研究公司Iceberg Research在2015年2月发布研究报告称，来宝集团存在会计问题，存在财务造假、夸大利润的嫌疑，随后，美国浑水公司（Muddy Waters）也公开质疑来宝集团的财务实力，致使来宝股价承压，累计跌去2/3，成为新加坡海峡时报指数中年度跌幅最大的成分股。而在2015年8月份，普华永道则认为来宝的财报没有问题。

NOBLE GROUP

来宝拥有澳大利亚上市矿业公司Yancoal 13%的股份，后者市值约9500万美元，来宝所持股份大概价值1200万美元。然而，在2014财年报告中，来宝将Yancoal股份的账面价值计入为3.2亿美元。

今年6月，来宝以高达6500万美元的价格将其位于蒙古一个尚未开发的煤矿约5万英亩的待开发区卖给了澳大利亚Guildford煤炭公司，而来宝去年2月份购买时仅花了376万美元。然而，分析师并不认可这一估值，并质疑这笔交易的实际性，称在全球“去煤”的大趋势下，这个煤矿的价值在如此短的时间内翻了十几倍，根本不切实际。

这不禁让人想起著名的安然财务造假丑闻——就在安然集团否认存在会计不当问题之后短短几个月，这家公司就被证实存在会计操纵并轰然倒下了。

而根据Iceberg的表述，来宝手中合约的公允价值已经大大超越其它对手公司，甚至是已经破产的安然公司（Enron）在顶峰时期的3.5倍。

来宝集团成立于1986年，由英国商人艾礼文(Richard Elman)创立，总部位于香港，并在1997年于新加坡上市。

（更多精彩财经资讯，点击这里下载华尔街见闻App)

http://wallstreetcn.com/node/228193

Noble Group’s “Collateral Margin Call”
The downgrade of Noble Group by Moody’s depicts an aggressive financial risk and a vulnerable business risk profile*
I) the first-order problem is Macro.
"The downgrade of Noble Group to sub-inv. is worrisome, but the main story is about the evolution of the commodity price downtrend. 1st round effects were felt in macro indicators (lower CapEx & growth for producers and following FX/interest rate adjustments). 2nd round effects will be about commodity exporters' governments reactions." Those effects will dominate in 2016 said Sacha Duparc, Head trader and structurer at Banque Cantonale Vaudoise.
II) Collateral margin call. The trader has billions of dollars in commodity prepays with NOCs and producers, the value of inventories and receivables collateralized by traders into trade finance arrangements have cratered in the past year.
This collateral value of Noble Group is being depressed, those loans are been called even if Noble Group (buoyed by liquidity in 2015) never missed a payment because the market says that Noble’s assets are worth less than they claim on their books.
Banks are requiring at least 1.6 B$ more in additional collateral that Noble Group hasn’t built over the good commodity years… Noble is being placed into either bankruptcy or they are been place in a tremendous economics adversity that so far they've not seen in 2015.
People have been hopeful that Noble might avoid a rating downgrade after the asset sale but it couldn’t,” said a Hong Kong-based credit trader at a Japanese investment bank.
Noble's move to raise US$750 million by selling its remaining stake in Noble Agri. I repeat what have said earlier in a previous comment: Noble Agri Sale was strictly a Collateral margin call.
Noble Group must raise money but their collateral base is new book value of 4,528 million while their Net Positive fair values gains of commodity contracts and derivatives exceeds MTM is over 4,500 million…

* Moody’s Global Credit Research - https://www.moodys.com/research/Moodys-downgrades-Noble-Group-to-Ba1-outlook-negative--PR_341857


By any model, this MTM represents between 90% and 105% of their book value.

Banks aren’t provided with the access of the exact breakout of the 4,500 million and PwC has not been able to review the exact assumptions and models behind these Net Positive fair values gains of commodity contracts and derivatives. Perhaps, Antoine Lavoisier, French nobleman of the 18th century and father of modern chemistry must have a great influence on the financial reporting of Asia’s Largest Commodity trader with "Nothing is lost, nothing is created, and everything is transformed".


Solvency Problem, not liquidity
I will make it clear that it is not Liquidity that banks are asking but for more Collateral from Noble starting this year because they also understand that this MTM gain on commodity contracts and derivatives of Noble will unlikely be realized at more than 10% and therefore is not valid collateral for the trader’s working capital borrowing base requirements.
A close friend hedgie in NY recalled me that at the height of 07', a IB sale desk lured them into "taking a position into undervalued trading books of the bank temporarily mispriced because of market illiquidity". At only 66cents on the Dollar, the deal turned-out to be 0.6 cent sinky.


http://www.zerohedge.com/news/2016-01-02/noble-group%E2%80%99s-collateral-margin-call

SINGAPORE (Dec 30): Noble Group bonds fall as Moody's downgrades them to “junk” status, proving the commodities firm's recent asset sale to turnaround its finances fails to impress, says Dow Jones.

The company's 2018- and 2020-due bonds are down three points to 66 cents and 69 cents on the dollar, respectively.

“People have been hopeful that Noble might avoid a rating downgrade after the asset sale but it couldn’t,” said a Hong Kong-based credit trader at a Japanese investment bank.

The trader notes, though, there’s almost no transactions of the bond, mainly due to the holiday season.

The price decline largely reflects dealer quotes and bearish sentiment amid a difficult operating outlook for the company.

Standard & Poor's is likely to be next to cut Noble's rating to “junk” as the rating agency remains skeptical, even after Noble's move to raise US$750 million ($1.06 billion) by selling its remaining stake in Noble Agri.

Moody's downgrades Noble Group to Ba1 (Junk); outlook negative
Global Credit Research-


Hong Kong, December 29, 2015 -- Moody's Investors Service has downgraded Noble Group Limited's senior unsecured bond ratings to Ba1 from Baa3 and the provisional rating on its senior unsecured MTN program to (P)Ba1 from (P)Baa3.

At the same time, Moody's has assigned a Ba1 corporate family rating to Noble and has therefore withdrawn the company's issuer rating.

The rating actions conclude Moody's review for downgrade initiated on 16 November 2015.

The outlook for the ratings is negative.

http://www.slideshare.net/SimonJacques1/moodys-downgrades-noble-group-to-ba1-outlook-negative

The Sale of Noble Agri by the trader Noble Group is not a cash inflow, Noble has to mark down this asset by 671M, meanwhile the Noble Group will continue to carry its portion of the Noble Agri JV's debt on its balance sheet. This will be translated as a negative effect on the book value of Noble Group and will increase the asset leverage ratio of the trader.

COMMENTS ON THE PROJECTED AGRI STAKE SALE

December 17, 2015 · by Iceberg Research · in Uncategorized · Leave a comment
During the Q3 conference call in November, Mr. Alireza, Noble’s CEO, said: “We are committed to our stake on Noble Agri, we are a 49% shareholder and we are working with our partners to enhance and improve the performance of it.” One month later, Noble announced they want to sell their stake in Agri. Desperate times call for desperate measures. The threat of a downgrade by the credit agencies is only one reason. We believe the more pressing reason is simply Noble’s liquidity position. The guarantee to Agri is also probably not accepted anymore by many banks.

COFCO would buy 49% of Agri for $700-$750m. This compares with the $1.46b that COFCO already paid for 51% of Agri. A simple conclusion would be that the valuation of Agri collapsed by half in one year. For COFCO, it is easier to properly value Agri now that Noble is not in charge anymore. However, an important reason behind this drop is that the accounting game that Noble played one year ago is now fully exposed. The real price for the 51% majority stake has never been $1.46b. This amount was the cash exchanged between COFCO and Noble but the net price included subsidies that Noble had to provide to Agri. Noble has always refused to give the total amount of these subsidies. They have always refused to release the Agri sale agreement. This document was only available for inspection at Noble’s office in Bermuda, in the middle of the Atlantic Ocean, far from the analysts’ eyes. If Noble had an office on the moon, they would have probably put it there.

This accounting illusion allowed Noble to avoid an impairment for the remaining 49% stake. Now that Noble has to sell its entire holding in Agri, the trick is exposed. In our first report, we conservatively estimated the real value of Agri at $2.4b, i.e. $500m less than the $2.94b implied by the transaction price of the 51% stake. The reality is worse. Agri is worth $1.5b+$700m=$2.2b and this is not even the final price since we need to deduct the subsidies (unknown amount).

Noble is expected to receive $700m-$750m in cash. This compares to a carrying value of around $1.25b for the Agri stake on the balance sheet in Q3. That means a projected loss of $500m-$550m for Q4. There is no reason to celebrate for Noble’s shareholders while this company is burning the furniture. Noble will try to reduce this loss with an earn out arrangement based on sugar price. This clause will be valued using a discounted cash flow model based on a commodity forward curve. If this sounds familiar, it’s normal. Noble uses the same methodology to value Yancoal and its commodity contracts fair values. As we know, no mountain is too high for the people in charge of valuing assets at Noble. We doubt this earn out will have any actual material value. Why would COFCO buy loss-making assets and leave the upside to the former owner while they are in a strong bargaining position? This would be a particularly bad proposal for a trader.

Once again, the same old accounting tricks are used by Noble: a few hundreds millions of additional fair values on the balance sheet and a shrinking list of saleable assets.

With Noble Group, Nothing is created, Nothing is lost, everything is transformed https://jacquessimon506.wordpress.com/2015/12/16/with-noble-group-nothing-is-created-nothing-is-lost/

S&P Just Warned Asia’s Largest Commodity Trader It May Be Junked
Posted on November 23, 2015 by The Trade, Shipping and Finance Wizard

SUMMARY:

[S&P HAS GIVEN NOBLE A DEADLINE OF THREE MONTHS IN WHICH TO RAISE A LOT OF CAPITAL, OR ELSE BE DOWNGRADED TO JUNK]

[NOBLE GROUP’S REALIZATION OF GAINS ON COMMODITY CONTRACTS AND DERIVATIVES AND FINANCIAL REPORTING DURING Q3 ARE CONTRARY TO THE LOGIC].

NOBLE GROUP IS IN A SPECIAL CLASS AND CANNOT BE COMPARED TO PEERS.

The name Noble Group should be familiar to frequent readers from our August 18 report on the company, but to those who are unfamiliar here is the quick summary: because it is Asia’s largest commodity trader, Noble can be better thought of as Asia’s Glencore.
As a further reminder, on August 18 we said that “we expect a big announcement of S&P on Noble Group later this week” as a result of the ongoing deterioration in the company’s fundamentals as well as various market-traded securities, notably its stocks and default swaps.
As usual, S&P was late, but just over three months later, the rating agency finally came out with the catalyst we have been expecting when moments ago it said that it had “placed its ‘BBB-‘ long-term corporate credit rating on Hong Kong-based supply-chain management service provider Noble Group Ltd. and the ‘BBB-‘ issue rating on the company’s senior unsecured notes on CreditWatch with negative implications.”In other words, Asia’s Glencore is about to be junked.
Here’s why, from S&P:

The CreditWatch action reflects our view that Noble’s liquidity and financial leverage have weakened and breached levels that we consider appropriate for the current rating. However, management’s commitment to raise new capital could support the company’s credit profile.
Noble’s liquidity deteriorated in the third quarter of 2015 following a 27% decline in the company’s net available readily marketable inventory to US$1.48 billion as of September 2015 from US$2.0 billion in June 2015.
The deterioration was largely related to the fall in commodities prices. The company’s available and undrawn committed credit lines fell almost 50% during the period to about US$1 billion. The company’s cash sources are less than 1.5x cash uses as of September 2015, below the threshold for a “strong” liquidity assessment.

Worse, S&P has given Noble a deadline of three months in which to raise a lot of capital, or else be downgraded to junk, a rating which could effectively end its trading business, and ultimately could lead to a liquidation of the entire company.

S&P Just Warned Asia’s Largest Commodity Trader It May Be Junked
https://jacquessimon506.wordpress.com/2015/11/23/sp-just-warned-asias-largest-commodity-trader-it-may-be-junked/