S&P rates PCCW-HKT notes BBB

Standard & Poor's said it assigned a BBB issue rating to the proposed issue of senior unsecured notes due 2016 by PCCW-HKT Capital No. 4 Ltd. HKT Group Holdings Ltd.

Hong Kong Telecommunications Ltd. guarantees the notes, which will rank pari passu with the existing unsubordinated and unsecured debt obligations. The company plans to use the proceeds for general corporate purposes, including repayment of debt. The rating is subject to review of final documents.

S&P said it views the proposed issuance as part of the company's debt-refinancing exercise. The deal should improve the company's debt maturity profile and increase its financial flexibility, the agency said.

The rating reflects the company's leading position in Hong Kong's fixed-line telecommunication and broadband markets, S&P said.

These strengths are tempered by increasing competition domestically and risks associated with PCCW's evolving growth strategy, the agency said.

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