Li Ka-shing-controlled CK Hutchison’s bond sale gets strong rating from Fitch, S&P
The planned notes, the proceeds of which will be used for general corporate purposes, have been rated A- by Fitch and A by S&P Global Ratings
Hong Kong-listed conglomerate CK Hutchison Holdings, which is in the midst of a controversial ports divestment, secured an upper medium-grade rating for its planned bond issuance on Tuesday.
Fitch Ratings assigned the Li Ka-shing-controlled group’s notes an A- and flagged them as a potential catalyst for a rating upgrade, while S&P Global Ratings gave them an A.
The size and pricing of the notes, to be issued through a special-purpose vehicle and guaranteed by the company, have yet to be set. The proceeds are likely to be used for refinancing and general corporate purposes.
In a note, Fitch analysts led by Samuel Hui said the rating was aligned with CK Hutchison’s long-term issuer rating. They said that the rating “reflects the company’s strong business profile, geographical diversification, prudent financial management, and stable cash flow from its high-quality port, retail, infrastructure, and telecommunications businesses”.
The analysts said the firm’s credit profile was expected to improve if the port asset sale was completed, but they needed more details on the post-transaction capital structure – a process that could take over six months – before making a final assessment.
The planned debt sale came after CK Hutchison group co-managing director Frank Sixt said last month there was “a reasonable chance” of reaching an agreement on the company’s ports assets, which include two facilities on the Panama Canal, though any deal was unlikely to be completed this year.