Credit agency Moody's Investors Service yesterday placed Citic Pacific under review with a possible downgrade after the blue-chip conglomerate was no longer guaranteed returns on Shanghai infrastructure projects. The United States credit agency expressed concern over the impact of the recent mainland policy to end high returns to Citic, which relies on mainland projects to generate a third of its cash flow. The possible downgrade came a day after Citic group managing director Henry Fan Hung-ling said he hoped to recoup its US$751 million investments in six Shanghai toll road and bridge projects. Mr Fan said Citic would not be required to make provisions against these assets. The State Council has ordered regional governments to end guaranteed fixed returns on infrastructure projects to foreign investors by the end of next month. Citic owns six infrastructure projects in Shanghai - Yang Pu bridge, Nan Pu bridge, Xu Pu bridge, Da Pu Lu tunnel, Yanan East Road tunnel and Hu Jia toll road - and had been guaranteed a 15 per cent investment return. According to Citic, contributions from these projects would have been about HK$820 million next year. The company is now negotiating with the Shanghai municipal government and Mr Fan was confident that Citic would not receive less than its principal. Moody's estimated that these projects in aggregate would contribute HK$1 billion next year, or about a third of the company's operating cash flow. It said stable cash flow from infrastructure projects was one of the main factors that supported Citic's Baa2 rating and the new policy on guaranteed returns would potentially lower future cash flow and undermine earnings stability. But Moody's said the change will not have any imminent negative impact on the company's liquidity given its large cash balance on hand and that project returns until the end of this year will not be affected. Standard & Poor's Rating Services said the new policy would have no effect on its ratings on Citic as it had already factored in any regulatory risk related to guaranteed fixed returns. Spokesmen from Citic were not available for comment.