12/10/2009 (Business Times, Malaysia) - MOODY's Investors Service has affirmed the 'BAA1' issuer rating of IOI Corp Bhd as well as the senior unsecured bonds and loans issued by IOI Ventures (L) Bhd which are guaranteed by IOI.

In a statement, the rating house said it had changed the outlook for the ratings to 'stable' from 'negative' which would have an effect on its bonds worth about US$500 million (US$1=RM3.37) and loans of 21 billion yen (100 yen = RM3.74)

IOI is involved in oil palm plantations and resource-based manufacturing, including olechemicals, as well as specialty oils and fats.

It is also a property development and investment group.
 
Moody's vice president/senior credit officer, Peter Choy, said IOI had improved its management of currency risk by terminating structural foreign exchange derivative transactions and maintaining currency and interest rate swaps that hedge its borrowings.

He said the group had strengthened its management of credit sales to minimise its bad debt which had helped support the change in its ratings outlook.

Choy said with the global economic downturn appeared to have bottomed, and the main palm oil-importing markets -- India and China -- continued to post resilient economic growth, IOI business was expected to stabilise over the medium term.

He said IOI has maintained a strong liquidity profile -- with debt maturities well spread out, and supported by undrawn committed banking facilities and abundant cash of RM2.4 billion, as of June 30,2009 -- thereby providing it with a buffer robust enough to cope with any challenge to its business in the next 12 to 18 months.

Choy said while IOI's ratings were supported by the favourable long-term outlook for palm oil demand, these could be tempered with among others, by both the commodity and cyclical pricing character of palm oil.

"The possibility of upward rating pressure on IOI''s ratings in the near term is limited, given the volatility in the palm oil and property markets," he said.

He said, however, upgrade pressure could emerge over time if IOI were to further reduce its overall debt.

Meanwhile, the last rating action with regard to IOI was taken on March 2, 2009, when the company''s issuer and debt ratings outlook was changed to negative following its release of its first-half results for financial year 2009. - Bernama