The 'A-' long-term rating on ETSA Utilities Finance Pty Ltd., the financing arm of ETSA Utilities (collectively ETSA), incorporates support from the Australian utility's majority owner Cheung Kong Infrastructure Holdings Ltd. (CKI; A-/Stable/-) and CKI's affiliate Hongkong Electric Holdings Ltd. (HEH; A+/Stable/--), including an undertaking to maintain minimum financial metrics consistent with the rating. The underlying credit quality of ETSA is 'BBB+', reflecting the group's monopoly electricity-distribution network operation in the state of South Australia (AAA/Stable/A-1+) and high level of cash flow certainty and stability due to its regulated operations. These strengths are partly offset by the company's aggressive capital structure and exposure of its modest cash flow to regulatory price resets (next due in July 2010). The ability and
