SUN Hung Kai Properties (SHKP) is following in the footsteps of Wharf (Holdings) and is seeking a rating for an oversubscribed $1.5 billion floating-rate note (FRN) issue. SHKP said the five-year FRN issue had been lifted to $3 billion, reflecting 'the solid credit standing of SHKP and the confidence of the banks and investors in the group'. It was applying for a credit rating from Standard & Poor's (S & P), it said, and the FRNs would be cleared and settled through the Central MoneyMarket Unit operated by the Hong Kong Monetary Authority (HKMA). S & P last month assigned a single-A rating to an FRN issued by Wharf, which became the first Hong Kong corporate to qualify for a liquidity adjustment facility (LAF) or liquefiable asset status. SHKP did not specify whether it was seeking to gain access to the HKMA's LAF or whether it was seeking to have its debt qualify as a liquefiable asset. Access to the LAF makes debt securities more attractive because holders can engage in repurchase agreements. Repurchase agreements allow holders to sell paper to the HKMA on condition they buy it back at a future time at an agreed rate. It allows the owners of the debt more flexibility and offers the HKMA a useful tool for controlling liquidity. Liquefiable asset status also makes debt securities more attractive to bank investors who have to maintain a proportion of their assets in liquid assets like cash or government bonds, or other qualifying and rated instruments. Bankers have said some debt issuers fear that medium and long-term funding will be squeezed by the financing of the new airport and are seeking ratings to make their debt securities more attractive. SHKP's FRN paid a coupon of 80 basis points over the three-month Hong Kong interbank offered rate and was arranged by ABN-AMRO Bank, China Development Finance Co (HK), Mitsubishi Finance and Sumitomo Finance (Asia). Proceeds of the deal will be used to refinance SHKP's short-term debts and the group will continue to maintain its low debt-to-equity ratio. 'This is in line with its policy of lengthening the maturity profile of the group's debt so as to better match the recurring income from its expanding rental property portfolio and other long-term investments,' SHKP said.