(The following was released by the rating agency)
HONG KONG (Standard & Poor's) July 16, 2012--Standard & Poor's Ratings Services said today that the rating and outlook on Sun Hung Kai Properties Ltd. (A+/Negative/--; cnAAA/--) are not affected by the charges of bribery and misconduct by the Independent Commission Against Corruption (ICAC) announced on July 13, 2012, against three executive directors of the company, including the two co-chairmen.
Sun Hung Kai Properties' (SHKP) daily operations and the execution of its strategy, including sales performance and land acquisition activities, have remained intact despite the recent arrests and charges against the company's directors. We believe SHKP's well-established investment property portfolio, which generates more than HK$10 billion per year in rental income, also provides downside protection if needed.
Furthermore, the company has taken measures to improve its management structure and decision-making process to adapt to any potential absence of the owner-managers and other executive directors. These measures include the appointment of deputy managing directors, alternate directors and expansion of the executive committee.
The negative outlook on the rating reflects our view that the charges may have an uncertain impact on the company's operation as the situation continues to unfold. The legal process may distract the top management. In addition, it's unclear to us if the company or any project could be implicated in any way. The charges are currently limited to individuals and not the company.