S&P puts Power Assets, Hongkong Electric on watch

Standard & Poor's said it placed its A+ long-term corporate credit ratings and cnAAA long-term Greater China regional scale ratings on both Hongkong Electric Co. Ltd. and its parent Power Assets Holdings Ltd. on CreditWatch with negative implications.

S&P also placed the issue ratings on all outstanding notes that Hongkong Electric issued or guaranteed on CreditWatch with negative implications.

S&P's CreditWatch action follows Power Assets' announcement that it intends to spin off and separately list the group's electricity business that Hongkong Electric operates. The proposed spinoff and listing is subject to the approval of Power Assets' shareholders and other conditions.

"The CreditWatch action on Hongkong Electric reflects our expectation that the company's financial strength could significantly weaken and that parent support to the company may diminish following the proposed spinoff," said S&P credit analyst Gloria Lu in a news release. "The CreditWatch action on Power Assets reflects our view that the company's dividends from Hongkong Electric would greatly reduce because of its lower equity interest after the spinoff."

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