Moody's may cut CLP

Moody's Investors Service said it placed on review for possible downgrade the A1 issuer rating of CLP Holdings Ltd. and the Aa3 senior unsecured debt rating of CLP Power Hong Kong Ltd., the 100%-owned regulated subsidiary of CLP. Moody's also said it affirmed the prime-1 short-term rating for both companies.

This action follows the news that the group has reached a final agreement with the Hong Kong government on new agreement guidelines, which governs CLP Power's operations.

CLP Power is the key cash flow generating subsidiary of CLP Holdings, accounting for about 75% of the group's fund flow from operation, Moody's said.

The reduced rate of return under the new agreement guidelines will inevitably pressure electricity tariffs and impact the cash generating ability of the CLP group, the agency said.

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