Published November 3, 2009

Noble seen redeeming 2013 bonds early

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(SINGAPORE) China Investment Corp's (CIC) purchase of a stake in Noble Group Ltd may allow the Hong Kong-based commodity supplier to redeem as much as 35 per cent of its 2013 bonds early, according to Nomura Holdings Inc.

'Noble is quite cash rich and funding costs right now would probably be lower than what they are currently paying,' Annisa Lee, an analyst at the Japanese bank, said in a phone interview from Hong Kong yesterday.

'There is an incentive for them to redeem the bonds and reduce their interest expense.'

A clause in the terms of Noble's 2013 bonds means it may use money raised from equity to redeem as much as 35 per cent of the notes at 108.5 cents on the dollar by May 30, 2011.

Any such redemption must be completed within 90 days of the closing date of the equity offering, and the CIC sale may enable Noble to exercise this clause, according to Ms Lee.

Noble, which supplies commodities from aluminium to zinc, said on Sept 22 that it agreed to sell a 15 per cent stake to CIC, China's sovereign wealth fund.

The company will use proceeds from the sale to expand investment in agricultural commodities including soybeans and sugar, it said at the time.

The 8.5 per cent coupon on Noble's 2013 bonds compares with an average of 2.5 percentage points over the London interbank offered rate (Libor) the company agreed to pay last month when it borrowed over three years from banks including Agricultural Bank of China Ltd and ING Groep NV. - Bloomberg