S&P may up Towngas China

Standard & Poor's said it placed its BBB- long-term foreign-currency corporate credit rating on Towngas China Co. Ltd. on CreditWatch with positive implications, along with the BBB- issue rating on its $200 million senior unsecured notes due 2011. The ratings on its parent, Hong Kong and China Gas Co. Ltd., are not affected.

The watch placement reflects a view that the proposed assets injection would strengthen the company's capital base and potentially improve its earnings and cash flow generation, S&P said.

The proposal is an all-share transaction, the agency said. There is no cash outlay from the company. In addition, the assets are all piped-gas projects, which have much higher and stable margins than the liquefied petroleum gas business that the company disposed of earlier in 2009, S&P said.

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