Moody’s lowers Sime Darby view to negative

Moody's Investors Service said it affirmed Sime Darby Bhd.'s A3 issuer rating and the A3 senior unsecured debt rating on the sukuk issued by Sime Darby Global Bhd., a wholly owned subsidiary of Sime Darby.

The outlook was revised negative.

Despite the broad spread of its business interests, Sime Darby has been impacted across the board by the slower rate of growth in China, Moody’s said, combined with lower commodity prices and a weaker domestic currency.

These factors have led to a surge in leverage to more than 4x for the year ended June 30 from 1.5x in 2012, the agency said.

The A3 rating is not sustainable at 4x leverage, Moody’s said.

Given the company's long track record and plans to de-leverage, the downgrade was limited to a negative outlook at this time, the agency said.

But if the company fails to deliver on the de-gearing within six months, the ratings could be downgraded, Moody’s said.

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