Thursday October 1, 2009
MARC assigns stable ratings for Sime debt papers
PETALING JAYA: Malaysian Rating Corp Bhd (MARC) has assigned preliminary ratings of AAA-ID and MARC-1-ID/AAA-ID to Sime Darby Bhd’s proposed Islamic debt programmes.
The programme comprises RM4.5bil Islamic medium term notes (IMTN) and RM500mil Islamic commercial papers/IMTN (ICP/IMTN) respectively with a combined limit of RM4.5bil.
The proceeds raised from the exercise would be used mainly to finance Sime Darby and its subsidiaries’ working capital requirements.
MARC said in a statement that the ratings carried a stable outlook.
“The stable ratings outlook incorporate some weakening of Sime Darby’s near-term credit measures from historical levels given the lack of free cash flow generation expected,” it said.
However, it pointed out that if the business conditions and operating performance proved to be significantly below MARC’s expectations, this could pressure Sime Darby’s current ratings or outlook.
“One of the main challenges Sime Darby will foreseeably face is receiving strong dividends flow from its subsidiaries amid slower growth prospects,” it said.
The ratings reflected MARC’s expectations that Sime Darby’s consolidated balance sheet and cash flow coverage would become progressively stronger as the operating climate in its core business lines improves over the intermediate term.
It also reflected Sime Darby’s favourable financial flexibility and the strong liquidity it had consistently maintained relative to leverage.