Moody's rates Sun Hung Kai note A1

Moody's Investors Service said it assigned an A1 rating to the proposed senior unsecured fixed-rate notes to be issued by Sun Hung Kai Properties (Singapore) Pte. Ltd. based on the irrevocable and unconditional guarantee to be provided by Hong Kong-based Sun Hung Kai Properties Ltd.

The outlook is stable.

The proceeds of the notes will primarily be used to fund general corporate activities of Sun Hung Kai's subsidiaries.

The agency said the A1 rating reflects Sun Hung Kai's sound financial profile, which is supported by a high level of recurring rental income, a track record of steady cash flow generation from residential development projects and strong financial flexibility. The company also has a strong balance sheet, as evidenced by its high cash balance of HK$7.8 billion as of June 2006 and low adjusted leverage of 16%.

However, the rating also incorporates the company's geographical concentration in Hong Kong, and the potential for rises in capital expenditure and further investments to expand its business, Moody's said.

Adjusted debt to gross cash flow GCF is around 3x to 3.5x.

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