Moody’s reviews Sime Darby’s Baa1 ratings for downgrade
While there is no clarity on how the plan will be implemented, we believe the listing of Sime Darby’s plantation and property businesses will lead to reduced diversification, scale and cash flows, and therefore a weaker credit profile. Jacintha Poh, Moody’s Vice-President and Senior Analyst
KUALA LUMPUR: Moody’s Investors Service is reviewing for downgrade Sime Darby Bhd’s ‘Baa1’ issuer rating and the ‘Baa1’ senior unsecured debt rating on sukuk issued by Sime Darby Global Bhd, following the latter’s plantation and property businesses listing announcement.
Sime Darby Global Bhd is a wholly- owned and guaranteed unit of Sime Darby.
In a statement yesterday, the rating agency said, it has also placed a review for downgrade Sime Darby Global’s ‘(P) Baa1’ rating on its senior unsecured medium-term note programme.
“While there is no clarity on how the plan will be implemented, we believe the listing of Sime Darby’s plantation and property businesses will lead to reduced diversification, scale and cash flows, and therefore a weaker credit profile,” said Moody’s VicePresident and Senior Analyst, Jacintha Poh.
On Jan 26, Sime Darby said it will create three standalone businesses by listing its plantation and property divisions on Bursa Securities Malaysia, while retaining its motors and industrial divisions.
Its management is currently evaluating implementation measures and the time needed to effect the plan.
Moody’s said its review for downgrade would assess the specifics of the transaction, once the details of Sime Darby’s plans were available.
“We will focus on how the existing debt will be allocated across the three entities, on the company’s financial policy, capital structure, cash flow and liquidity profiles and on-going business prospects post- transaction,” it said.
Moody’s said the review will be concluded once there was clarity on the transaction structure and certainty of the implementation. — Bernama