S&P downgrades Noble

S&P said it lowered the long-term corporate credit rating on Noble Group Ltd. to CC from CCC-.

The agency also said it lowered the long-term issue rating on the company's outstanding senior unsecured notes to CC from CCC-.

The outlook is negative.

The downgrades follow news of Noble's debt restructuring plan, S&P said.

The agency said it views the offer as a distressed exchange tantamount to an immediate default on conclusion because the offer price is materially lower than the par value of the outstanding notes.

Under the restructuring plan, the senior notes due in 2018, 2020 and 2022, and a revolving credit facility, will be replaced with three bonds totaling $1.655 billion, preference shares worth $200 million and a 70% stake in a newly set up company that will hold the assets of Noble, S&P explained.

About 90% of the preference shares will be directly issued to senior creditors and 10% will be issued to the new company, the agency added.

The sustainability of the capital structure after the restructuring will be a key credit factor for Noble, S&P said.

The negative outlook reflects the likelihood that S&P will lower the rating on Noble and its senior unsecured notes to D when the distressed exchange is complete.

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