GLNCY Glencore Plc (PK)

SINGAPORE—The chief executive of embattled commodities trader Noble Group Ltd. Wednesday claimed unspecified individuals had manipulated the price of insuring its debt in an effort to mislead the market and create a liquidity crisis at the company.

Noble boss Yusuf Alireza said he believed manipulation had taken place in the market for Noble's credit default swaps, known as CDS, an insurance-style product which pays out to investors in the event of a company debt default. When CDS prices rise, it is usually a sign investors believe the chance of a company default has gone up.

Mr. Alireza's comments go a step further than Noble's previous public statements this year, in which it has sought to respond to growing criticism of the company's accounting practices and profitability. Speaking at an event organized by the Singapore Institute of Directors, he described how Noble suspects its detractors have sought to make money from their criticism.

Noble is currently suing a former employee in Hong Kong, who it says is behind the anonymous blog known as Iceberg Research, which earlier this year published three reports criticizing Noble's accounting practices. The reports, along with other critiques from analysts, have contributed to a more than 60% fall in its share price.

Mr. Alireza didn't specify who he believed was behind the alleged trading manipulation. But he said "they" had taken advantage of the fact the market for Noble's CDS is relatively small and illiquid to drive up prices.

"They would go out and they would buy protection on CDS, to make the CDS [spread] get wide," Mr. Alireza said.

He said even a small intervention could have a big impact on the price of Noble's CDS, which could lead to increased media coverage of the company, in turn affecting its bonds and stock price.

Mr. Alireza's comments echo those made recently by a prominent member of the board of Glencore PLC, another commodity trader that has fallen from investor favor this year. That board member, former Morgan Stanley head John Mack, recently blamed short sellers and intervention in the CDS markets for the slump in Glencore's share price, which fell by as much as 29% on one trading day in September, since when it has recovered.

The price of insuring $10 million of Noble's 5-year bonds was $1,269,500 a year as of Wednesday, compared with less than $300,000 before Iceberg's first report in February.

Mr. Alireza said Noble's detractors had attempted to undermine the confidence of the firm's stakeholders in other ways, for example by calling the company's banks to question why they were still supporting the company. He said major ratings firms had told the company they had received similar calls.

"The attempt is to undermine the support of your stakeholders," Mr. Alireza said. "You may not have any liquidity issues, but if they're successful in undermining the support of your stakeholders you can develop liquidity issues."

Mr. Alireza didn't mention any specific party thought to be behind the market manipulation or calls to stakeholders.

Besides Iceberg, other critics of Noble this year have included U.S. short seller Muddy Waters, Hong Kong research firm GMT Research and Michael Dee, a former executive at Singapore's state-investment fund Temasek.

Such critics have claimed Noble uses aggressive accounting estimates that enable it to record high, unrealized profits in its income statements. The firm has consistently defended its accounting practices, saying they are in line with industry standards.

Mr. Alireza said the critics had been sensationalist. In particular, he said Iceberg had sought to inflict maximum damage on Noble's share price by timing the publication of its three reports before the Lunar New Year holiday in February, when markets trading volumes tend to be low, then shortly before the company's results and annual report were published.

In response, Iceberg Research told The Wall Street Journal its reports were published more than six months ago and "if the share price is so low now, it is because the arguments are solid." It added that it expects "the situation [for Noble] to deteriorate dramatically."

The blog, which hasn't identified its author or authors, reiterated its position that Noble is facing financial difficulty and referred to a series of recent departures of midlevel executives and traders from the firm.

During his speech, Mr. Alireza said all of Noble's most senior executives had remained in their roles and were confident about defending the company.

Write to Jake Maxwell Watts at jake.watts@wsj.com

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(END) Dow Jones Newswires

October 14, 2015 06:45 ET (10:45 GMT)

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