(The following was released by the rating agency)
SINGAPORE/SYDNEY, January 27 (Fitch) Fitch Ratings has assigned Sime Darby Berhad’s (Sime Darby) first tranche of $800m Sukuk notes issued under its $1.5bn Sukuk programme a final ‘A’ rating. The final rating is in line with the expected rating assigned on 22 January 2013.
On 15 January 2013, Fitch rated the Sukuk programme set up through a special purpose vehicle, Sime Darby Global Berhad, at the same level as Sime Darby’s senior unsecured rating in accordance with the agency’s “Rating Sukuk” criteria. Sime Darby’s obligations to the Sukuk programme rank equally with its senior unsecured debt obligations and the programme is exposed to low structural subordination risk on account of Sime Darby’s majority stake in and management control of key operating entities.
Fitch rates Sime Darby Long-Term Foreign and Local Currency Issuer Default (IDR) ‘A’, with Stable Outlook. It also has a Long-term foreign currency senior unsecured rating of ‘A’. Sime Darby’s ratings reflect its strong plantations business, its large size, a diversified business portfolio and its conservative financial leverage.
The Stable Outlook reflects Fitch’s view of the supportive industry fundamentals of Sime
Darby’s plantation business, and the politically and economically stable markets in which it operates.
What could trigger a rating action?
Negative: Future developments that may, individually or collectively, lead to negative rating action include:
- A downgrade in Malaysia’s Country Ceiling ‘A’, which would result in a corresponding downgrade in Sime Darby’s Long-Term Foreign Currency IDR. Sime Darby’s Long-Term Foreign Currency IDR is currently at the same level as the Malaysian Country Ceiling
- An increase in the role of the Malaysian sovereign or related entities in Sime Darby’s decision-making process will result in the Long-Term Foreign and Local Currency IDRs being downgraded and placed on a par with the sovereign rating, which is currently ‘A-’
- A sustained increase in financial leverage (adjusted net debt/ funds from operations) to over 1.75x
No positive rating action is expected in the medium term due to the cyclical nature of SIME’s key businesses.
By assigning a rating to the programme and the issue under the programme, Fitch is not expressing an opinion as to whether the programme or sukuk issuance under the programme are compliant with Shariah principles.