(The following statement was released by the rating agency)
Jan 14 - Standard & Poor's Ratings Services today assigned its 'A' long-term issue rating to
a proposed US$1.5 billion equivalent Sukuk issuance program by Sime Darby Global Bhd. The issuer
is a special purpose vehicle incorporated in Malaysia that Sime Darby Bhd.
(A/Stable/--; axAAA) owns.
The program benefits from a purchase undertaking that Sime Darby provides to cover any
payment shortfall in a timely manner and redeem the full value of the Sukuk at maturity.
In addition, we understand that Sime Darby's payment obligations under the purchase
undertaking are irrevocable, unconditional, unsubordinated, and unsecured. They rank equally
with most other unsecured obligations of the company. Consequently, we equalize the rating on
the program with the long-term rating on Sime Darby, reflecting our expectation that the Sukuk
ranks equally with the company's other unsecured obligations.
Sime Darby Global, as the issuer and trustee, has indicated that it will invest the program
proceeds to purchase Sharia-compliant ijara assets from Sime Darby. The assets will subsequently
be leased back to Sime Darby.
Sime Darby will make periodic distribution (lease) payments to the issuer that can cover
issuer's debt service obligations toward Sukuk holders over the term of the program. Sukuk
holders, while having a beneficial interest in the trust that holds the ijara assets, do not
have any direct recourse to the ijara assets. They will also not hold legal ownership in the
Upon maturity of the Sukuk or the occurrence of a dissolution event, the trustee for the
Sukuk can exercise a purchase undertaking requiring Sime Darby to buy the assets. The price will
cover the aggregate face amount outstanding of the Sukuk and accrued and unpaid periodic
Standard & Poor's has not evaluated whether the Sukuk issuance program is Sharia compliant.
The rating solely represents our opinion about the likelihood of full and timely repayment of
the Sukuk issued.
RELATED CRITERIA AND RESEARCH
-- Principles Of Credit Ratings, Feb. 16, 2011
-- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
-- Standard & Poor's Approach To Rating Sukuk, Sept. 17, 2007