Moody's gives PCCW-HKT notes Baa2

Moody's Investors Service said it assigned a Baa2 senior unsecured rating to the 51/2-year notes issued by PCCW-HKT Capital No. 4 Ltd., which are to be irrevocably and unconditionally guaranteed by Hong Kong Telecommunications Ltd., which is rated Baa2, and its parent, HKT Group Holdings Ltd.

The outlook is negative.

The proceeds will be used for general corporate purposes, including debt refinancing.

The rating reflects the company's solid market position, sound technology base and the fairly stable profile of its underlying core fixed-line telecommunications business, Moody's said.

This is further entrenched by the improving profitability in both the group's mobile and pay-TV operations, as well as the potential quadruple-play synergies arising from combining the fixed-line, broadband, mobile and pay-TV operations under a single entity, the agency said.

The strengths are partially offset by PCCW's high consolidated leverage of 3.8x, Moody's said.

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