Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
01 Mar 2005
MOODY'S ASSIGNS FIRST-TIME A3 RATING TO IOI CORP BERHAD; OUTLOOK STABLE
Approximately US$300 Million in Debt Securities Affected
Hong Kong, March 01, 2005 -- Moody's Investors Service has assigned its A3 senior unsecured rating
to the proposed US$300 million bond to be issued by IOI Ventures
(L) Berhad and guaranteed by IOI Corporation Berhad (IOI). The
rating outlook is stable. This is the first time that Moody's
has assigned a rating to IOI.
The bond proceeds will be used to refinance the balance of a EUR230 million
syndicated loan and support general corporate purposes.
The A3 rating reflects the key credit strengths of IOI: (1) the
competitive advantages offered by its leading position as a well-managed
and low-cost crude palm oil (CPO) producer, (2) its diversification
into the downstream business creates a vertically integrated operation
and helps counter CPO price volatility, (3) the favorable state
of demand for palm oil, which supports IOI's business fundamentals,
(4) its experienced management team and track record in managing the company
through the cycles, and (5) its sound financial standing,
which exhibits positive free cash flow generation and a well-managed
debt maturity profile.
At the same time, the A3 rating reflects the following key credit
challenges: (1) the commodity nature of CPO with average historical
prices in decline over the last 10 years and subject to cyclical trends,
(2) the cyclicality of the property business, although this situation
is partially mitigated by IOI's township focus and track record
for sustaining sales, (3) the company's historical record
for growing via acquisitions with potential future investments/acquisitions
creating uncertainty for its business and financial profiles, (4)
its strategy of managing return on equity (ROE) through dividend and share
buybacks, and (5) its relatively weak back-up liquidity arrangements.
Moody's says that IOI is a leader in the palm oil industry and has
established its reputation as one of the most efficient CPO producers
in the world. The company also benefits from its low production
costs of around RM500/ton-RM550/ton (US$132/ton-US$145/ton),
which compares favorably to the average cost positions of producers in
Malaysia and Indonesia.
Moody's considers that IOI's diversification into the downstream
business -- via majority-owned IOI Oleochemical Industries
Berhad (IOI Oleo) and wholly-owned Loders Croklaan Group B.V.
(Loders) -- provides additional income sources through value-added
manufacturing services, enhances logistic and distribution efficiencies,
and expands geographic customer base. More importantly, this
downstream move helps reduce the impact of volatile CPO prices as a proportion
of downstream earnings correlate negatively with CPO prices.
Moody's believes that the demand fundamentals for palm oil are sound,
supported by 1) continued GDP and population growth in consuming countries,
2) low per-capital consumption for oils and fats, 3) the
multiple-product applications and high nutritional value of palm
oil, 4) long-term demand growth from US and Europe due to
regulatory changes favorable to palm oil, and 5) potential for palm
oil to be used for bio-diesel.
IOI's management team, headed by Executive Chairman Tan Sri
Dato' Lee Shin Cheng, is experienced and has strong knowledge
of both the plantation and property industries. It has demonstrated
an established track record of successfully managing the company through
The historical consolidated credit metrics of IOI have been strong with
EBITDA/gross interest of 18.8x and leverage of 25% in FY2004.
Moody's expects these ratios will weaken to 7-8x and over
30% respectively after consideration of the proposed bond and downside
CPO price scenario, but they would remain satisfactory. Moody's
includes non-cash interest expenses -- related to the imputed
interest on a US$310 million zero-coupon exchangeable bond
-- in its ratios as the exchangeable bond has a put option exercisable
in 2006 and the conversion price is significantly higher than the current
share price. IOI is expected to continue generating positive free
The A3 rating is based on the consolidated approach. Moody's
understands that IOI, via majority board representations,
has full control over the dividend policies of its two majority-owned
listed subsidiaries, IOI Oleo and IOI Properties Berhad (IOI Prop).
Moody's also understands IOI regards the two subsidiaries as core
and will seek to raise its ownership stake in each over time. We
have also evaluated IOI's financials by de-consolidating
these two entities, and they remain adequate, albeit weaker
than the consolidated financials. Both IOI Oleo and IOI Prop have
also exhibited strong financial profiles on a stand-alone basis.
On the other hand, IOI is exposed to CPO price movements,
which have exhibited a downward trend in average selling prices over the
last 10 years as well as volatility around that average. Prices
are currently on a downtrend -- following an uptrend apparent until
early 2004 -- given the expectation of higher supply from major competing
oils. Such risk is partially mitigated by the company's track
record in various different CPO price cycles, low-cost position
and successful diversification into downstream operations.
While the property market in general is also cyclical in nature,
historical track records suggest that IOI's own property business
has weathered previous cycles relatively well. Moody's believes
that IOI's position -- as primarily a township developer --
and its focus on medium-cost housing as well as designing well-planned
townships help it to withstand property cycles.
The rating also recognizes that IOI has a track record for growing its
business via acquisitions in the past. IOI maintained a large cash
pile of RM1.28 billion as of December 2004, but it remains
uncertain how the company will utilize its cash resources. Nevertheless,
Moody's draws comfort that its past acquisitions were all related
to its core palm oil and property businesses, and that it has demonstrated
strong financial discipline. IOI will also adhere to the following
criteria when making future acquisitions: they are within the existing
lines of its core businesses, meet a defined internal rate of return,
and generate economic profit above the company's weighted average
cost of capital.
Moody's expects IOI to maintain the following credit ratios:
leverage below 33%, EBITDA/net interest of at least 15x,
and EBIT/net interest of at least 12x, while pursuing its growth
strategy. This set of target ratios, in Moody's opinion,
supports a solid investment grade rating.
The rating also considers IOI's strategy of managing ROE via dividend
payouts and share buybacks, as well as its relatively weak back-up
liquidity arrangements. Moody's takes comfort that its annual
debt obligations in the next few years will be relatively benign,
following the issuance of the proposed US$300 million bond.
In addition, Moody's understands that the company is flexible
in carrying out its capital management plan and will preserve a minimum
cash balance of RM500-600 million at the group level and RM200-300
million at the company level. IOI has unutilized standby back-up
facilities of RM600 million, although they are subject to annual
review/market conditions, and include rating-trigger as well
as MAC clauses.
Upon issuance of the proposed US$300 million bond and taking into
account loan refinancing/repayments expected to be made by IOI,
both total debt incurred at subsidiaries' levels and total secured
debt will be less than 15% of consolidated debt. Going forward,
Moody's does not expect IOI to incur significant debt at subsidiaries'
levels or secured debt. Therefore, the ratings do not factor
into subordination risks.
Upward rating pressure could evolve if IOI demonstrates its ability to
continue sustaining operating profits and margins over the CPO price cycle,
and maintains its financial prudence, while pursing its growth strategy,
such that EBITDA/gross interest exceeds 12x and TD/EBITDA averages below
1.5x across the cycle.
Downward rating pressure could evolve if (i) CPO prices decline and their
impact is not adequately offset by IOI's downstream operations or
de-leveraging strategy, or (ii) aggressive acquisitions occur,
but which do not generate satisfactory returns and raise the company's
overall risk profile, such that EBITDA/gross interest drops below
7x and TD/EBITDA exceeds 3x. Downward rating pressure could also
result if IOI reduces its management influence or shareholding interest
in IOI Prop and IOI Oleo to below 51%.
IOI Corporation Berhad, headquartered in Malaysia and listed on
Bursa Securities Malaysia, is engaged in oil palm plantation and
resource-based manufacturing, including oleochemical and
specialty oils and fats. It is also one of the largest property
development and investment groups in Malaysia.
Corporate Finance Group
Moody's Asia Pacific Ltd.
Corporate Finance Group
Moody's Investors Service Pty Ltd
612 9270 8100
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.