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Interim Report 2016
As at 30 June 2016, the net debt of the Trust Group was HK$40,653 million
(31 December 2015: HK$41,060 million) with a net debt-to-net total capital ratio of
46% (31 December 2015: 46%). The Trust Group’s financial profile remained strong
during the period. On 23 February 2016, Standard & Poor’s pronounced the long term
credit ratings are “A-” with a stable outlook for both of the Company and HK Electric
unchanged since September 2015 and January 2014, respectively.
In the first half of 2016, the Trust Group took advantage of the liquidity in the bond
market to extend its debt maturity profile by issuing US$750 million 10 year Notes
in the public bond market and also tapped a total of HK$1,410 million with 15 year
tenor in the Hong Kong dollar private placements market through its Medium Term
Notes Programme. During the period, the Trust Group has entered into new 5 year
term loan facilities totalling HK$15,200 million with various financial institutions. The
proceeds of these issues together with the new term loans and internal resources were
used to prepay approximately HK$29 billion of its existing term loan facilities maturing
in 2017.
The profile of the Trust Group’s external borrowings as at 30 June 2016, after taking
into account forward foreign exchange contracts, cross currency and interest rate
swaps, was as follows:
(1)
100% were in Hong Kong dollars;
(2)
51% were bank loans and 49% were capital market instruments;
(3)
16% were repayable within 1 year, 53% were repayable after 1 year but within
5 years and 31% were repayable after 5 years; and
(4)
88% were in fixed rate and 12% were in floating rate.
The Trust Group’s policy is to maintain a portion of its debt at fixed interest rates
taking into consideration business and operational needs. Interest rate risk is managed
by either securing fixed rate borrowings or by using interest rate derivatives.
Currency and interest rate risks are actively managed in accordance with the Trust
Group’s treasury policy. Derivative financial instruments are used primarily for
managing interest rate and foreign currency risks and not for speculative purposes.
Treasury transactions are only executed with counterparties with acceptable credit
ratings to control counterparty risk exposure.