Moody’s lowers Swire Pacific view to negative

Moody’s Investors Service said it affirmed Swire Pacific Ltd.’s A3 senior unsecured bond ratings and changed the outlook to negative.

The agency also affirmed the provisional A3 senior unsecured medium-term note rating issued by Swire Pacific MTN Financing Ltd., along with the Baa1 rating on the junior subordinated bonds of Swire Pacific Capital Ltd.

The outlooks on Swire Pacific MTN Financing and Swire Pacific Capital also are negative.

The A2 issuer rating and stable outlook on Swire Properties Ltd. is unchanged.

On Nov. 17, Swire Pacific announced that it had entered into an agreement to realign its existing Coca-Cola franchise territories in China and acquire new territories for total net consideration of RMB 5.9 billion, Moody’s said.

The company plans to fund the purchase price, which is subject to closing adjustments for cash and working capital from a combination of cash on hand and existing committed credit facilities, the agency said.

The transaction is subject to regulatory approvals.

The negative outlook reflects the expected incremental increase in Swire Pacific’s leverage, which is already at the weak end of the A3 rating and will delay an improvement of its credit profile, the agency said.

The majority of Swire Pacific’s non-property businesses continue to face headwinds stemming from slowing economic growth in China and low oil prices, Moody’s said, and the ongoing stress on the profitability and cash flow of these businesses is likely to pressure Swire Pacific’s credit profile over the next 12 to 18 months.

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