S&P may cut Hong Kong energy companies

Standard & Poor's said it placed the corporate credit ratings and issue ratings of several Hong Kong energy companies on Ratings Watch with negative implications.

The ratings on negative watch include Hutchison Whampoa Ltd.'s A- ratings and stable outlook, Cheung Kong Infrastructure Holdings Ltd.'s A- ratings and stable outlook, Hongkong Electric Co. Ltd.'s A+ ratings and stable outlook and Hongkong Electric Holdings Ltd.'s A+ ratings and stable outlook.

The ratings on three Australian electricity distribution businesses owned jointly by Hongkong Electric and Cheung Kong Infrastructure, CitiPower Trust, Powercor Australia LLC and ETSA Utilities Finance Pty Ltd., also were also placed on CreditWatch with negative implications as these businesses benefit from parent support.

A consortium comprising of Hongkong Electric, Cheung Kong Infrastructure and the Li Ka Shing Foundation has made an irrevocable offer to Electricite de France SA to acquire EDF Energy plc for about £5.775 billion.

The proposed acquisition may deviate from the expectation that Hutchison would continue its deleveraging strategy, the agency said.

S&P said it believes the proposed acquisition will likely materially weaken the balance sheet and liquidity of Cheung Kong and Hongkong Electric.

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