Sime Darby Plantation Berhad Large debt refinancing is credit positive

On 30 January, Sime Darby Plantation Berhad (SDP, Baa1 negative) announced that it had refinanced around MYR3.9 billion of credit facilities in December 2019, or around 49% of its total reported debt.

The large debt refinancing is credit positive for SDP as it will improve its liquidity and extend its debt maturities.

In total, SDP refinanced its $760 million (MYR3.1 billion) foreign currency loans, which previously had a bullet maturity in June 2020, with new amortizing term loans. It also refinanced MYR800 million working capital facilitates with new term loans, which have longer maturities. SDP announced that the new facilities offer slightly lower interest rates than its previous facilities, though specific details were not disclosed.

Pro forma for the refinancing, we estimate SDP's short term debt as a proportion of total debt declined to around 28% from 77% as of 30 September 2019.

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