Moody's: Palm oil industry has strong outlook

Moody's Investors Service said it has a positive outlook for Asia Pacific's rated palm-oil industry over the next 12 to 18 months.

Moody's said in a new report that a rapid rise and continued high prices for crude palm oil during the past 18 months have strengthened balance sheets of Asian palm-oil producers, including IOI Corp. Bhd., Bakrie Sumatera Plantations Tbk, Agri-International Resources Pte. Ltd., Golden Agri-Resources Ltd., and Ciliandra Perkasa. The companies have responded by buying more plantations and increased planting of greenfield properties.

The positive outlook for the sector will not necessarily translate into upgrades for rated companies because the market is at a cyclical peak, the agency said, and some issuers are still integrating earlier expansions or are still small.

But, Moody's said it will continue to monitor issuers' corporate governance and financial strategies.

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