Moody's changes CLP outlook to negative

Moody's Investors Service said it changed to negative from stable the outlook for CLP Holdings Ltd.'s A2 issuer rating, CLP Power Hong Kong Ltd.'s A1 issuer rating and CLP Power Hong Kong Financing Ltd.'s A1 senior debt rating and affirmed the ratings.

The outlook change follows the announcement that CLP Power has reached an agreement to acquire a 30% stake in Castle Peak Power Co. Ltd. and a 51% stake in Hong Kong Pumped Storage Development Co. Ltd. from ExxonMobil Energy Ltd., increasing CLP Power's ownership of Castle to 70% from 40% and its ownership of Pumped Storage to 100% from 49%. The cash consideration for the two acquisitions totals HK$14 billion.

The agency said the acquisitions, if largely debt-funded, will result in projected credit metrics that are marginal for the current ratings. The negative outlook reflects the uncertainty over the financing options for the acquisitions against the backdrop of the company's lingering weak operating performance in Australia and India.

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