John J Hardy
Saxo Bank’s head of FX strategy John Hardy takes a closer look at trends and moves in today’s forex charts, including EURUSD, USDJPY, AUDUSD, and EURSEK.
Strategic trade
Trade view / 03 June 2016 at 14:06 GMT

#SaxoStrats: Noble could be set for a turn in fortunes

Fixed Income trader / Saxo Bank
Price target:
Market price:
d Background

Following the slump in commodity prices, Noble Group has been forced to restructure its balance sheet. This week the company announced a rights issue, which saw its shares tumble and bonds
jump. The rights issue comes on top of previously announced refinancing of bank credit lines and disposal of several business subsidiaries.

This will go a long way to secure recovery in our view, and has a clear signal of increased shareholder commitment. We believe the new top management will seek to recapitalise the company without inflicting permanent losses on bond holders.

Following the deteriorating business conditions, Noble has been stripped of its Investment grade status. Moody’s recently confirmed its Ba3 rating, while Fitch just recently downgraded it from BBB- to BB+. S&P has been more aggressive in holding a B+ evaluation.

The current pricing however, despite the recent bounce, indicates a far more downbeat outlook as the 11% yield level is significantly worse than B-rated US corporates, which are yielding 5% at this maturity. Hence we believe there is still upside from these levels.

Management and risk description

Key risks include commodity price drops, especially coal, and refinancing initiatives which are holding existing credit investors at a disadvantage. Furthermore, aggressive rate hikes from the Federal Reserve may impact emerging-markets sentiment negatively.


Buy in minimum 100,000 nominal USD with 1,000 nominal USD increments. Return objective is primarily price gain in the short term when the recovery continues or further capital enforcing initiatives are announced.



Source: Saxo Bank, Bloomberg


Source: Saxo Bank, Bloomberg

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more

Denisv Denisv
Good day Michael, today Noble Group 81-82, is it still looking good?
Michael Boye Michael Boye
Hi Denisv. Obviously the market timing wasn't optimal given the recent Brexit turmoil, and all Emerging Market assets have been vulnerable. Fundamentally, there has been no major news out for Noble, except that S&P has cut its credit ratings to B+. With a 13% yield however, the market is reflecting a much more negative outlook than this, so while acknowledging a higher risk, we still think bond prices could quickly turn around (subject to the Brexit decision of course).


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail