We expect IOI's business and financial risk profiles to weaken following the company's proposal to separate its palm oil and property businesses. The Malaysia-based palm oil producer's operating performance will be fully exposed to volatility in crude palm oil prices, which are weakening. We are therefore lowering our long-term corporate credit rating on IOI to 'BBB' from 'BBB+'. We are also lowering our ASEAN regional scale rating on the company to 'axA' from 'axA+' and the issue rating on the senior unsecured debt that IOI guarantees to 'BBB' from 'BBB+'. The stable outlook reflects our expectation that IOI's operating performance will remain stable over the next 12-18 months and that the weakening in palm oil prices will not be substantial.
