-S&P gives investment status to Hutchison Whampoa perpetual securities.
BANKING AND CREDIT NEWS-October 20, 2010--S&P gives investment status to Hutchison Whampoa perpetual securities(C)2010 M2 COMMUNICATIONS http://www.m2.com
20 October 2010 - S&P today assigned its investment-grade rating of BBB to the planned offer of perpetual capital securities backed by Hong Kong-based conglomerate Hutchison Whampoa (HKG:0013).
The equality-like instruments, to be issued by subsidiary Hutchison Whampoa International (10) Ltd, are subordinated in nature and optionally deferrable, which accounts for the two-step difference between the issue rating and the A- long-term credit rating of the guarantor, which denotes strong capacity to service its financial obligations, the agency explained.
The company will use the proceeds to repay debts and for other general corporate needs.
The transaction, combined with USD1bn (EUR726m) of similar securities issued by its unit Cheung Kong Infrastructure Holdings (HKG:1038), is consistent with the company's continued debt reduction efforts bringing unadjusted net debt to net capital ratio below 30% over the next two years, or closer to what the rating agency has projected.
The current rating on Hutchison Whampoa incorporates its strong liquidity and financial flexibility but faces downside risk as implied by the "negative" listing, due to the group's pending debt-funded acquisition of the UK network of French utility EDF, the service added.
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