Fitch: KCRC outlook stable

Fitch Ratings said it revised the outlook on the Kowloon-Canton Railway Corp.'s (KCRC) and MTR Corp. Ltd.'s (MTRC) senior unsecured foreign currency and senior unsecured local currency ratings to stable from negative.

At the same time, Fitch has affirmed the ratings of KCRC and MTRC, including KCRC's long-term foreign currency AA-, local currency AA ratings and MTRC's long-term foreign currency AA- and local currency AA+ ratings.

The new outlook for the two railway companies reflects the change in outlook on the Hong Kong Special Administrative Region's foreign currency rating Monday, as KCRC's and MTRC's foreign currency ratings are constrained by that of Hong Kong. Fitch, however, does not consider their local currency ratings to be sovereign-constrained.

Fitch notes that KCRC's and MTRC's local currency ratings better reflect their fundamental credit qualities. The difference of the two entities' ratings primarily reflects the expansionary phase of KCRC is in, as this gives rise to uncertainty over the passenger volumes for its new rail routes and its considerable capex funding requirements.

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