S&P keeps Hong Kong Telecommunications on watch

Standard & Poor's said it kept the BBB long-term corporate credit rating on Hong Kong Telecommunications Ltd. and BBB issue rating on all of the outstanding notes on CreditWatch with negative implications.

S&P placed the ratings on CreditWatch on March 25 based on the slower-than-expected deleveraging after Hong Kong Telecommunications' parent PCCW Ltd. announced its 2010 results, the agency said.

The CreditWatch status reflects the significant uncertainties in PCCW's proposed near-term deleveraging plans, announced March 21, through the listing and partial sale of PCCW's telecommunications assets via a proposed business trust structure, the agency added.

Although PCCW is making progress in the business trust listing, the company still needs to finalize the structure to meet various regulatory requirements and obtain further approvals, the agency noted. The timing and amount of debt reduction associated with this process remains uncertain.

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