26/06/2008 (Forbes), Mumbai - Moody's Investors Service said it has a positive rating outlook for the Asia Pacific's rated palm-oil industry over the next 12 to 18 months after a rapid rise and continued high prices for crude palm oil (CPO) in the past 18 months strengthened balance sheets of Asian palm-oil producers, who responded by buying more plantations and increased planting of greenfield properties.

Peter Choy, Moody's (nyse: MCO - news - people ) vice president, senior credit officer and the lead author of the report, said most issuers are now more inclined to focus on organic growth, to delay their downstream, bio-diesel projects due to higher feedstock costs and to avoid new purchases amid higher asset prices.

'The positive outlook for the sector will not necessarily translate into upgrades for rated firms because the market is at a cyclical peak and some issuers are still integrating earlier expansions or are still small,' Choy said.

The report's second author, Wonnie Chu, a Moody's analyst, said: 'Recent regulatory changes may have a negative impact on bio-diesel prospects, but such output accounts for a negligible share of issuers' earnings.'

Chu also said the sharp cut in India's import duty on refined and crude palm oil should support demand from Malaysian and Indonesian issuers.

Chu also said rated palm-oil companies face no imminent refinancing risks and generally have good intrinsic liquidity.