S&P: IOI outlook negative

Standard & Poor's said it affirmed IOI Corp. Bhd.'s BBB+ corporate credit and senior unsecured foreign-currency issue rating.

The ratings were removed from CreditWatch with negative implications - where they were placed on Nov. 19 after IOI announced plans for a $600 million issue of bonds to fund its expansion, working capital and potential acquisition plans - and the outlook is now negative.

The negative outlook reflects S&P's concerns about the company's more aggressive approach to growth and acquisitions, with significant leveraged investments in overseas higher-end property development. The agency said that although the impact of these investment plans on the group's financial profile has been partially alleviated by the recent strong crude palm oil price uptrend, the rapid debt increase could lead to future cash flows falling short of the levels required for its current rating under softening price cycles in its key crude palm oil and property-development segments.

The current ratings continue to be supported by IOI's favorable plantation resource profile, a highly competitive cost position and some synergy between key business segments, S&P said.

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