Moody's rating on fixed-line business paves way for bond issue
Pacific Century CyberWorks has received investment-grade ratings from Moody's Investors Service and Standard & Poor's (S&P) on its fixed-line business PCCW-HKT Telephone, paving the way for a bond issuance.
Moody's yesterday assigned an initial Baa1 rating for CyberWorks' senior unsecured rating, while S&P gave a BBB rating, also with a stable outlook, for the company's first credit rating.
Executives in CyberWorks said the high ratings given by Moody's were a 'nice surprise'. At this rating, CyberWorks was on a par with United States counterparts such as Sprint and WorldCom.
Moody's said the Baa1 rating reflected HKT's market position, strong brand recognition and high customer loyalty, as well as its experienced management team and commitment by CyberWorks to maintain the company's financial profile. However, this rating also reflected some risks associated with 100 per cent ownership by CyberWorks, given its short credit history and its recent large acquisition.
Moody's said HKT might have to support the group's capital needs over and above PCCW's existing reserves, which would be a concern as HKT's level of gearing limited financial flexibility.
CyberWorks is looking to raise HK$2 billion to HK$3 billion in fixed-rate bonds as soon as this week, according to Reuters. Executive director Frederick Ma Si-hang declined to comment on the bond issue.