The power-supply arm of CLP Holdings has launched a US$1.5 billion medium-term note programme, taking advantage of the low-interest environment. The note programme will help fund the utility's planned HK$30 billion capital expenditure between 1999 and 2004. It will be listed on the Luxemburg and Hong Kong stock exchanges, with Morgan Stanley as arranger. CLP Power spokeswoman Jane Lau said: '[The note programme] is more cost-efficient.' CLP Power would guarantee the programme and the terms of the note would be determined later, she said. Yesterday, credit rating agencies Standard & Poor's and Moody's Investors Service assigned ratings to the note programme. Standard & Poor's stamped an A-plus long-term rating and A-1 short-term rating, while Moody's gave an A3 foreign-currency debt rating and Aa1 local-currency rating. CLP Power, which serves the New Territories, Kowloon and Lantau, has its capital expenditure on power generation and distribution assets tied to its earnings under the Scheme of Control agreement. The agreement allows CLP Power and Hongkong Electric Holdings to earn a maximum 15 per cent profit on their fixed assets in use. Between 1999 and last year, CLP Power spent about HK$11.9 billion on power assets. This means in the following three years, another HK$18.1 billion will be spent, most of which will be funded by the note programme. However, some analysts believed the actual spending would be less as a result of a weaker demand for electricity in Hong Kong and lower equipment costs. They estimated the final spending would amount to between HK$22 billion and HK$28 billion. Standard & Poor's director Mary Ellen Olson said CLP Power's strong credit profile was backed by its sound financial operations and favourable regulation under the Scheme of Control agreement. Moody's said its ratings factored in the expectation of a continued stable electricity industry and no material changes to the terms of the agreement before its expiry in 2008.
