Moody's rates Hong Kong & China Gas bond A1

Moody's Investors Service said it assigned its A1 issuer rating to the Hong Kong & China Gas Co. Ltd. and A1 senior unsecured rating to the company's proposed bond issue.

The outlook is stable.

The company has a long operating track record as the first public utility company in Hong Kong, Moody's said, and it shows a track record of passing on rising fuel costs through fuel cost adjustments. That establishes a highly predictable level of cash flow generation from its domestic gas business, the agency said, which is the core credit strength of the company.

The company's future investments in China also offer growth potential, Moody's said, but they come with higher business risks. And the related large capital expenditure planned over the next few years will result in negative free cash flows, the agency added.

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