Standard & Poor's (S&P) has affirmed CLP Holdings' rating even though the company's recent purchase of power assets in Australia and India are not expected to provide immediate returns. S&P yesterday said CLP Holdings and its local arm - CLP Power Hong Kong - would retain their A-plus ratings because of stable outlooks. The United States rating agency said the 'investments have speculative business and financial profiles'. Moreover, Australia-based Yallourn Energy would require substantial capital expenditure to modernise the plant, S&P said. The company would also be likely to require a restructuring of capital, and a resolution of industrial relations problems before substantial returns to CLP, it said. S&P said India-based Gujarat Powergen Energy was expected to provide immediate cash returns, but its plant was in India, where investment returns were subject to institutional, counterparty and currency risks. Last week, CLP announced a US$594 million acquisition of an 80 per cent interest in the Asia Pacific assets of PowerGen of Britain. Among the assets are Yallourn Energy and Gujarat Powergen. The agency added that if a major portion of the substantial debt at Yallourn Energy and Gujarat Powergen become refinanced or guaranteed by CLP its gearing and coverage levels would deteriorate, although it was expected that the debt would remain non-recourse to the utility. CLP, through CLP Power, supplies electricity to consumers in Kowloon, the New Territories and Lantau. CLP's rating remained unchanged because it continued to be anchored by the strength of CLP Power, which accounted for 84 per cent of the holding company's before-interest expense earnings, the agency said. The utility would have to add additional debt to finance the acquisition, but excluding non-recourse debt at the projects, total debt was expected to remain at a moderate level, it said.