KUALA LUMPUR – Moody’s is putting the government-linked Sime Darby Bhd under review for a possible ratings downgrade over the conglomerate’s plan to carve out its plantations and property divisions.
Sime Darby is currently rated BAA1 for both its bonds and sukuk issues, the eighth highest under the ratings firm’s evaluation system for credit risk.
“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, a Moody’s vice president and senior analyst, said in a statement.
The firm said it will assess Sime Darby over its announced plans, with special focus on how the Malaysian GLC intends to restructure its existing debt as well as adjustments to its cash flow and corporate structure, among others.
On January 26, the world’s largest palm oil company by land size announced its intention to spin off its plantations and property businesses in separate listings on the Bursa Malaysia.
It said it will keep its trading and logistics business under the parent company that will retain its listed status on the Malaysian exchange.
The property and plantations units contributed nearly 70 per cent of Sime Darby’s profits in 2016 on the back of RM2.4 billion in revenue.
– Malay Mail