Moody's downs CITIC outlook to negative

Moody's Investors Service said it changed the outlook on CITIC Pacific Ltd.'s Baa3 issuer rating and CITIC Pacific Finance (2001) Ltd.'s Baa3 senior unsecured bond to negative from stable

The negative outlook reflects Moody's concerns over CITIC Pacific's continued shift in business focus from Hong Kong to China and increasing revenue contributions from more volatile businesses, including the property development and steel sectors in China.

The action also follows CITIC Pacific's announcement that it will invest in a 49% stake in a large-scale property development project in Shanghai and sell its 50% stake in Festival Walk, a prime shopping center in Kowloon Tong, Korea, for HK$6.2 billion. These developments have put pressure on CITIC Pacific's baseline credit assessment.

Nevertheless, Moody's said the company draws support from its diversified portfolio, healthy debt maturity profile, sound liquidity position and prudent investment and financial policies. Its cash on hand and available committed bank facilities are sufficient to cover its capex and refinancing requirements for the next 12 months.

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