Noble falls most since 1998, bond risk doubles as CEO quits

BEIJING, Nov 10 (Bloomberg): Noble Group Ltd., a commodity supplier part-owned by China's sovereign wealth fund, fell the most since 1998 in Singapore trading and its bond-default risk doubled after Chief Executive Officer Ricardo Leiman quit following the company's first loss in 14 years. The stock dropped as much as 28 per cent, the biggest slide since Sept. 10, 1998, with more than 10 per cent of shares changing hands. The cost of insuring Noble's debt against default for three years rose 250 basis points to 560 basis points as of 1:15 p.m. in Singapore, according to Royal Bank of Scotland Group Plc. A close at that point would be the highest since May 2009, CMA data show. The loss and Leiman's resignation follow a drop in global commodities demand since June on concern that Greece and other euro-zone members may default on debt and China's economic growth has slowed. Chairman and founder Richard Elman, 71, will be acting CEO of the company, which lost more than S$2 billion ($1.6 billion) in value as analysts slashed forecasts. "It was the Ricardo resignation that had more shock effect than the loss itself," said Ben Santoso, an analyst with DBS Vickers Securities in Singapore. "It leaves more questions on where he is going, whether there will be more management changes, whether Richard will pursue a different strategy," said Santoso, who downgraded the stock to "hold" from "buy." Earnings were eroded by "extreme volatility" in carbon- credits trading and cotton prices, Noble said in a statement Wednesday. The company reported a $17.5 million third-quarter loss, compared with a profit of $157.2 million a year earlier. The Dow Jones-UBS Commodity Index fell 23 per cent in the quarter to Sept. 30, its biggest contraction in three years. Noble said it made a $207.7 million net loss on cash-flow hedging. Operating income from Noble's supply chain almost halved to $242 million in the third quarter from a year earlier. Elman will be CEO until talks with Leiman's unidentified replacement are completed, the Hong Kong-based supplier of energy, food and mining commodities said Wednesday after the Singapore market closed. Noble fell 27 per cent to end at S$1.180 today. "It was quite a surprise to see Noble post a loss," said James Koh, a Kim Eng Securities Pte. analyst in Singapore. "I don't think the company's overall direction was wrong in terms of investment, but maybe risk management was off."