SHKP fires back at Fitch profit and credit assessments

PUBLISHED : Tuesday, 22 July, 2003, 12:00am
UPDATED : Tuesday, 22 July, 2003, 12:00am

Sun Hung Kai Properties (SHKP) has hit back at a weak credit assessment by Fitch Ratings, which cited a bleak outlook for Hong Kong commercial rents and shrunken profit margins from the firm's core residential development business.

The agency assigned Hong Kong's largest developer an A-minus rating, lower than that assigned by Moody's, which rates the firm's foreign-currency debt on the same A3 level as the Hong Kong government.

Pointing to an expected severe deterioration in the commercial rental market, Fitch said the leasing outlook in Central was bleak due to completion of the Two International Finance Centre tower.

It said the 1.5 million-square-foot project had delivered fresh supply equal to that already vacant in Central, a shock that has prompted rents to fall to levels not seen since the mid-1980s.

Fitch pointed out that SHKP had a contingent liability of $3.3 billion as its share of the project loan and, without offering comment, said it 'observed' that many of the developer's other projects were undertaken through non-consolidated vehicles.

In response, SHKP said in a written statement that it 'queried' Fitch's findings.

'SHKP has not provided Fitch Ratings with any detailed and relevant information that could lead to a proper rating,' a spokesperson said.

Fitch placed a stable rating and said it believed the firm could 'comfortably withstand a deterioration in the market'.