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SCMP Reporter

PCCW shares fell 3.8 per cent on Wednesday to a three-week low, after credit agency Moody's Investors Service downgraded the company's  primary senior debt rating.
PCCW's bonds also came under selling pressure as its spread widened by 12 basis points following the downgrade on Tuesday.
Moody's lowered its senior unsecured rating for PCCW-HKT to Baa2 from Baa1, citing concerns about the debt-laden company's declining fixed-line business.
The downgrade  means PCCW  will have to pay 25 basis points more on its 7.75 per cent, US$1-billion bonds due in 2011, equivalent to an extra US$2.5 million a year in interest expenses. 
Last year, it had interest expenses of US$281 million.
Analysts said while the incremental expense was not significant, the downgrade might affect  PCCW's other privately placed bonds or bank debts outstanding.
'At this point, we view this development as only slightly negative for the equity story as the downgrade only brings Moody's rating in line with S&P's 'BBB' rating, which is still two notches above the critically important 'junk' status,' CSFB said  yesterday.
Spreads on PCCW-dollar bonds due were  two basis points wider at 252 basis points over Treasuries, according to Reuters, while spreads on Hutchison '13 were  four basis points wider at 242 basis points over Treasuries.
Nomura, which has a sell recommendation on PCCW, said: 'PCCW's market share losses are likely to accelerate in the coming months and the company does not have pricing flexibility to respond to the competition.
'Given the downward pressure on revenue, the stock's substantial valuation premium to global peers seems unjustified.'



PCCW hits three-week low after downgrade