Moody's may cut CLP

Moody's Investors Service said it placed on review for possible downgrade the A2 issuer rating of CLP Holdings Ltd., the A1 issuer rating of CLP Power Hong Kong Ltd., and the A1 senior unsecured debt rating of CLP Power Hong Kong Financing Ltd. The prime-1 short-term ratings also have been placed on review for possible downgrade.

This action follows news that TRUenergy, the wholly-owned subsidiary of CLP, will acquire the EnergyAustralia retail business, the Delta Western GenTrader bundle and two power station development sites as part of the electricity privatization process that is being undertaken by Australia's New South Wales government, Moody's said.

The review for downgrade reflects the debt-funded nature of the transaction, Moody's said.

These transactions will weaken the company's consolidated financial profile to a level that may not be consistent with current ratings, the agency said.

The significant size of the transaction relative to the company's balance sheet, Moody's said, and the potential integration challenges are additional considerations for the downward review.

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