Moody's cuts IOI view to negative

Moody's Investors Service said it changed IOI Corp. Bhd.'s outlook to negative from stable for its Baa1 issuer rating, along with the outlook on its senior unsecured bonds and loans issued by IOI Ventures Bhd., which are guaranteed by IOI.

The change has been driven by IOI's recently reported weaker profitability, which is mainly the result of higher than expected foreign-exchange losses and customer defaults amid declining crude palm oil prices, Moody's said. These losses have caused concerns about weakness in the company's internal management system, especially in effectively controlling its foreign-exchange exposure, the agency said.

The ratings are supported by the favorable long-term outlook for palm oil demand, but tempered by the commodity nature and cyclicality pricing character of palm oil, Moody's said.

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