S&P: Hongkong Electric unaffected

Standard & Poor's said the long-term corporate credit ratings and outlook on Hongkong Electric Co. Ltd. (A+/stable) and on its parent company, Hongkong Electric Holdings Ltd. (A+/stable), are not affected by the revised terms with the Hong Kong government. The new agreement, which takes effect from Jan. 1, 2009, reduces the permitted cap on net fixed assets return to 9.99%, excluding renewable energy, from a maximum of 15%.

S&P said the companies' strong financial profiles are likely to remain healthy and commensurate with the current ratings, although the revised agreement is likely to hurt revenue, EBITDA and cash flow. The government has an option to extend the 10-year term ending December 2018 for another five years until December 2023.

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