Moody’s continues Sime Darby review

Moody's Investors Service said it continues to review for downgrade the Baa1 issuer rating of Sime Darby Bhd.

At the same time, the agency continues to review for downgrade the provisional Baa1 rating on the senior unsecured medium-term note program of Sime Darby Global Bhd. and the Baa1 senior unsecured debt rating on the sukuk issued by Sime Darby Global.

Moody's initiated the review on Feb. 3 after Sime Darby’s announcement that it plans to demerge and list its plantation and property businesses.

On April 18, Sime Darby announced a tender offer for cash repurchase of its $800 million sukuk bonds issued by Sime Darby Global – $400 million due January 2018 and $400 million due January 2023 – as well as a consent solicitation to move the sukuk bonds to Sime Darby Plantation Sdn Bhd. (Baa1 stable). The results of the tender offer and consent solicitation are expected to be announced on May 16.

"Assuming a successful change in obligor, such that Sime Darby Global Berhad becomes a wholly-owned and backed subsidiary of Sime Darby Plantation Sdn Bhd, we will confirm the (P)Baa1 rating on the senior unsecured medium-term note program of Sime Darby Global Berhad and the Baa1 senior unsecured debt rating on the sukuk issued by Sime Darby Global Berhad," Moody's vice president and senior analyst Jacintha Poh said in a news release.

However, we expect to continue our review for downgrade of the Baa1 issuer rating of Sime Darby Berhad, as uncertainties remain around the debt allocation between this entity and its property business which is also to be demerged into a separately listed unit. Additionally, the demerger exercise has yet to be approved by shareholders."

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