TEXT-S&P rates Sun Hung Kai Properties Ltd.'s proposed notes 'A+'
(The following statement was released by the rating agency)
Jan 07 - Standard & Poor's Ratings Services today assigned its 'A+' long-term issue rating and 'cnAAA' long-term Greater China regional scale rating to a proposed issue of 10-year U.S.-dollar fixed-rate senior unsecured notes by Sun Hung Kai Properties (Capital Market) Ltd., a subsidiary of Sun Hung Kai Properties Ltd. (SHKP: A+/Negative/--; cnAAA/--). The proposed notes will be a drawdown under the US$6 billion medium-term notes program that SHKP unconditionally and irrevocably guarantees. The rating on the notes is subject to our review of the final issue documentation.
SHKP will use the notes proceeds for general corporate purposes, including refinancing of maturing debts.
The rating on SHKP reflects the steady growth in the company's high-quality investment property portfolio in Hong Kong and China. SHKP has the largest and most diversified investment property portfolio among peers in Hong Kong. The company's leading market position in Hong Kong for property development and leasing and its well-recognized brand allow it to price at a premium. Further rating strengths include SHKP's solid execution of its growth strategy, its conservative and consistent financial management, strong liquidity, and ample financial flexibility.
SHKP's exposure to the Chinese real estate market, which we view as more risky and less mature than that of Hong Kong, partly offsets these strengths. The cyclical and competitive nature of, and policy risks in, the Hong Kong and Chinese property markets put pressure on the company's sales and margin during down cycles.
The negative rating outlook on SHKP reflects our view that an ongoing legal action against the company's officials may have an uncertain impact on its operations. In addition, it's unclear to us if SHKP or any project will be implicated in any way. The charges are currently limited to individuals and not the company.
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-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
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