ข่าวประชาสัมพันธ์Uncategorized

Ratings On CK Infrastructure Holdings And Power Assets Holdings Raised To ‘A’ After Parent Upgrade; Outlooks Stable

          HONG KONG (S&P Global Ratings) Sept. 21, 2018--S&P Global Ratings today raised its long-term issuer credit ratings on CK Infrastructure Holdings Ltd. (CKI) and Power Assets Holdings Ltd. (PAH) to 'A' from 'A-'. The outlook is stable for both entities. At the same time, we raised our long-term issue rating on outstanding senior unsecured notes guaranteed by CKI to 'A' from 'A-'. We also raised CKI's guaranteed hybrid securities' long-term issue rating to 'BBB+' from 'BBB'.
          We upgraded CKI and PAH after raising the rating on the parent, CK Hutchison Holdings Ltd. (A/Stable/--), earlier today. 
          Our upgrade on CK Hutchison reflects our view that the Hong Kong-based diversified conglomerate is likely to improve its financial leverage in the next 12-24 months through a combination of prudent financial management, asset monetization, and consistent earnings growth. In our view, CK Hutchison has strong financial flexibility and a track record of active management to support its credit metrics. 
          We equalize the final issuer credit rating on CKI with CK Hutchison because of CKI's core status in the group. The result is one notch rating uplift over CKI's 'a-' stand-alone credit profile (SACP). In our view, CKI is the major flagship for CK Hutchison's utilities and infrastructure assets and integral to the group overall business strategy. The group's senior management shows strong committed support to CKI, and the group is highly unlikely to sell its stakes in the company. 
          Our rating on Hong Kong-based utility PAH is capped by that on CKI because we regard PAH as a moderately strategic member of CKI. We believe PAH is important to CKI's long-term strategy, given their record of joint investments in overseas regulated utilities and other infrastructure businesses. We assess PAH's SACP at 'aa', stronger than that of CKI, owing to the utility's very low leverage. Both companies' business risk profiles are aligned and excellent, in our view.
          The SACPs of CKI and PAH could come under pressure if planned acquisitions proceed. This includes the takeover of Australian pipeline operator APA Group and the purchase of economic interests in six infrastructure assets from CK Hutchison. Both transactions would require capital contributions of about Hong Kong dollar (HK$) 16.8 billion from PAH and HK$19.2 billion from CKI.
          We expect these purchases may increase leverage at both companies, with cash holdings financing only about half of their respective considerations. 
          We anticipate PAH's SACP could lower to the high-end of the single 'a' category, based on our estimate of its net debt position after the proposed acquisitions, and given its acquisitive appetite. 
          By our estimates, CKI's ratio of funds from operations (FFO) to debt is likely to weaken to about 20% if the said transactions proceed. We believe CKI will arrange its capital structure carefully in order to moderate the pressure on leverage and preserve its financial strength. The company has the financial flexibility and track record to manage its balance sheet through various means, such as equity finance, hybrid securities issuance, and divestments of small interests in its large and diverse global infrastructure portfolio. 
          The stable outlook on CKI reflects the outlook on the company's parent. The outlook also reflects our expectation that CKI will maintain its core status in the group. 
          We could lower the rating on CKI if we downgrade CK Hutchison. We could also downgrade CKI if we assess that it is no longer a core subsidiary of the parent.
          We could lower CKI's SACP if: 
          - The company's FFO to debt were to fall below 23% or discretionary cash flow remains negative on an ongoing basis, indicating higher financial risks. This could happen if the company embarks on significant debt-funded acquisitions, or its cash flows weaken materially due to regulatory resetting; or
          - The company expands into higher-risk assets, such as non-regulated businesses, representing a shift in its investment philosophy.

          We could raise the rating on CKI if we upgrade the parent. 
          The stable outlook on PAH reflects the outlook on CKI, which owns 38.01% of PAH. It also reflects our expectation that the company will still maintain strong credit metrics, although its leverage will moderately increase over the next 24 months. 
          We could downgrade PAH if we lower the rating on CKI. 
          We could upgrade PAH if we raise the rating on CKI and the SACP of PAH is at least 'a+'.