Moody's Investors Service said yesterday it had placed the debt rating of Wharf Holdings' guaranteed subsidiaries under review for a possible downgrade. Ratings under review would be the Baa1 ratings on the guaranteed senior unsecured debt issued by Wharf Capital International (1994), Wharf International Finance, and Wharf Overseas Capital (1994), and the Baa2 rating on the guaranteed senior subordinated debt issued by Wharf Capital International (1993). The United States ratings agency said the move reflected concerns about the effect on Wharf's rental income from the slowdown in the retail and property markets. The announcement is a step further than Moody's move last month to lower Wharf's debt rating outlook, as it means there will now be a definite review of the company's financial position. The latest announcement comes just two days after fellow ratings agency Standard and Poor's cut Wharf's long-term credit rating from A to A-. Moody's said the latest decision was motivated by concern over the possible effect on Wharf's rental income and cash flow from potentially prolonged weakness in the retail sector. The agency said the move also reflected Wharf's expected significant increase in space available for lease at a time when the Hong Kong property market had weakened and might remain weak for longer than expected. Moody's also said it expected to focus in its review on the degree of Wharf's dependence on floating rate debt in an environment of prolonged high interest rates. The agency said Wharf's higher than expected leverage might be compounded by claims against the company arising from its legal dispute with US cable television company United International Holdings. Wharf shares yesterday closed unchanged at $13.35, after tumbling 9.1 per cent on Tuesday.