Rail fare laws could reduce credit rating
The credit ratings and financial status of the territory's railway companies will be affected if their fare revision mechanisms require legislative approval, international credit rating agencies say.
Standard & Poor's managing director of Paul Coughlin said the imposition of legislation over fare increases would create adversarial uncertainties on the companies' revenue and have a significantly negative effect on their credit standings.
Democratic Party legislator Sin Chung-kai has moved a private member's bill to put the fare increases of the Mass Transit Railway Corp (MTRC) and Kowloon-Canton Railway Corp (KCRC) under Legco's control.
'The proposed legislation will cause us to revise downward our cash flow projections for [MTRC] in future years,' Anne LeBourgeois, vice-president of Chase Manhattan Bank, said.
Banks said such a change may increase the cost of financing.
Three of four credit rating agencies regarded the fare-setting mechanism an important factor in rating operators. Mr Sin said legislators would monitor the fare rise sensibly and would not create any negative effect.
'A monitoring system will enhance the transparency and accountability of the two railway corporations and allow the public to monitor . . . the fares that have so much bearing on their standard of living,' he said.
