S&P keeps PCCW-HKT on watch

Standard & Poor's said that the BBB long-term corporate credit rating on PCCW-HKT Telephone Ltd. will remain on CreditWatch with negative implications after its parent company PCCW Ltd. announced that $1.17 billion in PCCW shares will be sold to Hong Kong financier Francis Leung.

The agency noted that the rating and the issue rating on senior secured debt were placed on CreditWatch on June 20, following an announcement last month that PCCW was in talks to sell all of its core telecom and media assets to Macquarie Bank Ltd. (A/stable/A-1) or Texas Pacific Group.

The latest announcement appears to thwart their bids, but at this stage there has been no formal withdrawal of the buyout offers, S&P added.

While the new transaction seems to be more creditor friendly than the previous bids, given a lower likelihood of a leveraged buyout, some lingering uncertainties remain, the agency said.

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