Moody's lowers MTR, Kowloon-Canton

Moody's Investors Service said it downgraded the issuer and senior unsecured ratings of MTR Corp. Ltd. and Kowloon-Canton Railway Corp. and the senior unsecured ratings of MTR Corp. (C.I.) Ltd. by one notch to Aa2 from Aa1.

Moody's also said it changed to stable from negative the outlook on these issuers.

The actions follow a decision to downgrade Hong Kong's sovereign rating to Aa2 from Aa1 and change the outlook on the sovereign rating to stable from negative, the agency said.

Under Moody's joint default analysis approach for government-related issuers, the rating or credit quality of the Hong Kong government, as the support provider, is one of the key inputs for the issuers, the agency explained.

Therefore, the ratings of MTR and Kowloon-Canton are very sensitive to an improvement or decline in the rating of the Hong Kong government, Moody's said.

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