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Technology Stocks : PCW - Pacific Century CyberWorks Limited

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To: pennywise who started this subject	7/10/2001 9:48:45 PM
From: ms.smartest.person	Read Replies (1) of 2248

Salomon: PCCW Bonds to Lower Financial Risk, But Raise Interest Costs Jul 10, 2001 - 11:18:08 HKT Quamnet News Service Salomon Smith Barney said though the ongoing bond issue of PCCW (0008) will help extend debt maturity and hedge against increase in interest rates, thereby lowering overall financial risk, this will likely result in higher borrowing costs in the short term. In its Asia-Pacific morning research call today, the investment house said its net interest expense estimates for PCCW could rise 6-13 percent in 2001 and 15-30 percent in 2002, depending on the final issue size (US$2.3-3.8 billion) and pricing (its fixed income group estimates 200-250 bps above 10-yr T-bond). The impact from 2003 onwards is unlikely to be significant, as its estimates already assume an increasing LIBOR (London Interbank Offered Rate), it said. "The overall impact on net income is likely to be 10-20 percent in 2001 and 2002," said Pratik Gupta, analyst at Salomon. "Overall interest cover should still be tolerable at about 2 times." PCCW may be able to enter into interest-rate swaps and soften the impact, but by and large, Salomon's (as well as consensus) interest expense estimates will likely increase due to the higher borrowing cost, said Gupta. The investment house keeps a Neutral (3H) rating on PCCW.

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