Noble founder raises stake as Standard & Poor's maintains rating

[SINGAPORE] Noble Group's chairman and founder raised his holding in Asia's biggest commodity trading house as Standard & Poor's said the company's credit rating was unaffected by criticism over its accounting practices.

Richard Elman purchased 4.8 million shares at a price of 93.54 Singapore cents a share in a transaction worth about S$4.5 million (US$3.3 million), lifting his stake in Noble to 21 per cent, according to a March 2 filing.

The anonymous Iceberg group has issued two reports on Noble and alleged it overstates on its books the value of associate companies including Yancoal Australia, a charge that the trading house denies. Iceberg has flagged that it plans to release a third critical report.

Noble fell 3.1 per cent to 94.50 Singapore cents at the close of trading Monday, the lowest since Feb 5 last year, while the benchmark Strait Times Index was little changed.

Standard & Poor's has maintained a BBB- rating with a stable outlook on Noble citing improved financial leverage and a strong liquidity position, it said in a March 2 note.

The rating is unaffected by allegations made in reports issued so far by Iceberg, credit analysts led by Cindy Huang said in the note. Noble is rated Baa3 by Moody's and has a BBB- rating with Fitch Ratings.

"We view fair value accounting and the mark-to-market of financial assets and liabilities as an ordinary part of operations for commodity trading companies like Noble," the Standard & Poor's analysts said in the note. "The company's risk management is adequate, in our view." Noble believes that a "disgruntled" junior employee fired a year and a half ago is behind the Iceberg reports, chief executive officer Yusuf Alireza said last week on an earnings calls. The company has passed the information to Singapore's markets regulator and doesn't plan to pursue legal action itself, Alireza said.

The company reported its first quarterly loss in more than three years last week, partly because of US$438 million in writedowns to reflect the tumble in commodity prices and a plunge in profits at its mining unit.

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BT Explains (Infographic): Noble versus the Iceberg