United States credit rating agency Standard & Poor's (S&P) has lowered Wharf Holdings' long-term rating from A to A-, citing higher interest rates and worsening earnings prospects for the company's core business. Wharf's credit ratings were also placed on CreditWatch with negative implications. The move comes just two weeks after Moody's Investors Service lowered Wharf's debt rating outlook to negative, along with those of Swire Pacific and Hysan Development, due to the property slump. Standard & Poor's said the property market downturn was hurting Wharf, and the slide in prices was not over yet. The agency said a prolonged recession could have more serious implications for Wharf's investment property business, where the company has a large exposure to office and retail properties. These factors are in addition to difficulties at Wharf's pay-television operation, Wharf Cable, which has incurred substantial losses in the past few years. Standard & Poor's said the ongoing litigation involving Wharf and US cable television company United International Holdings could also have an impact on business and finances. The agency said Wharf's interest coverage was weak compared with its peers, as net rental income covered interest expenses by about 2.5 times in December 1996, and this was expected to worsen as expenses increased. Standard & Poor's said it planned to meet with Wharf's management to assess their strategies for overcoming the difficult business environment. A spokesman for Wharf said the company would make no comment on the rating change. Analysts said the downgrade was not surprising given Moody's move last month, and was likely to have a limited impact on the company. ING Baring Securities analyst Johnny Wong said: 'If Wharf needs refinancing, it will cost them more. But right now no one is going to go out and borrow too much money as banks will be wary of lending to property.' Wharf shares yesterday surged 34.2 per cent to $14.70, as property counters led the market higher.