Fitch: CLP Holdings on watch

Fitch Ratings said it placed CLP Holdings Ltd.'s and CLP Power Hong Kong Ltd.'s long-term foreign- and local-currency issuer default rating of A and short-term issuer default ratings of F1 on Rating Watch negative.

The action follows news that CLP Power Hong Kong has reached an agreement to acquire a further 30% stake in Castle Peak Power Co. Ltd. for HK$12 billion and the remaining 51% stake in Hong Kong Pumped Storage Development Co. Ltd. for HK$2 billion from Exxon Mobil Corp.'s wholly owned subsidiary, ExxonMobil Energy Ltd.

The negative watch reflects a potential deterioration in CLP Holding's financial profile should the acquisitions be entirely debt-funded as credit and coverage ratios could worsen to levels that are not in line with their current A ratings, Fitch said.

The agency said it expects to resolve the negative watch once the transaction completes and there is greater certainty of the long-term funding structure.

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