S&P Raises KEPCO's Credit Rating, Reflects Strategic Position and Government Ownership
In a move that strengthens Korea Electric Power Corp's (KEPCO) credit standing, Standard and Poor's (S&P) raised the company's long-term foreign currency corporate credit rating to triple B-minus from double B-plus, while also upgrading its short-term foreign currency credit rating to A-3 from B. This upgrade comes on the heels of S&P's previous decision to raise the Republic of Korea's sovereign foreign currency rating to triple B-minus from double B-plus.
Key Takeaways:
- KEPCO's strategic position as Korea's only vertically integrated electric utility company contributed to the rating upgrade.
- The company's majority government ownership also played a role in the rating decision, as S&P viewed it as a stabilizing factor.
- Despite challenges from lower energy demand and larger debt service requirements, KEPCO's ratings reflected its demonstrated ability to generate cash to service debt obligations.
- S&P also raised KEPCO's long-term foreign currency senior debt rating and issuer credit rating, citing its strategic position and government ownership.
- KEPCO's weak capital structure and intense financial pressure from current economic conditions tempered the upgrade.
- The rating changes also highlighted KEPCO's perseverance in an extremely difficult operating environment in Korea.
Statistics:
- Triple B-minus: the upgraded long-term foreign currency corporate credit rating for KEPCO.
- A-3: the upgraded short-term foreign currency credit rating for KEPCO.
- Double B-plus: the previous long-term foreign currency corporate credit rating for KEPCO.
- B: the previous short-term foreign currency credit rating for KEPCO.
- 1999: the year the rating changes took place.
Sources:
- Standard and Poor's (S&P)
- ASIA PULSE (C) 1999 Asia Pulse Pte Ltd
- COMTEX - http://www.comtexnews.com