Fitch puts PCCW-HKT Telephone on negative watch

Fitch Ratings said it revised the Rating Watch on PCCW-HKT Telephone Ltd.'s BBB+ long-term foreign-currency issuer default rating and the BBB+ rating of its senior unsecured debt to negative from evolving, following the joint privatization plan proposed and announced by PCCW's major shareholders, Pacific Century Regional Developments Ltd. and China Netcom Communications Group Corp.

The negative watch reflects concerns that the plan will increase the company's financial leverage, Fitch said.

The agency also said it believes that, irrespective of its success, the proposed plan clearly signals a willingness of the two major shareholders to increase the company's financial leverage.

The ratings will be closely monitored for possible downgrades, pending the completion of this or an alternative privatization plan, Fitch said.

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