Fitch Rates Korea Finance Corp's GMTN programme 'A+(exp)'
May 21, 2012
Fitch Ratings-Seoul/Singapore-20 May 2012: Fitch Ratings has assigned Korea Finance Corporation's (KoFC, 'A+'/Positive) global medium-term note (GMTN) programme expected ratings of Long-term 'A+(exp)' and Short-term 'F1(exp)'.
At the same time, Fitch has affirmed and withdrawn the Long-term 'A+ rating of KoFC' s euro medium-term note (EMTN) programme as it is being replaced by the GMTN.
The final ratings are contingent on the receipt of final documents conforming to information already received.
The notes issued under the GMTN programme will be unsecured and unsubordinated obligation of KoFC. It can issue up to USD10bn or its equivalent in other currencies outstanding at any one time. Notes can be issued in currencies or maturities as may be agreed between KoFC and investors. KoFC plans to use the proceeds to repay existing debt and for general operation purposes.
The expected ratings of KoFC's GMTN programme are in line with KoFC's Long- and Short-Term Issuer Default Ratings of 'A+' and 'F1' respectively. The IDRs are equalised with South Korea's sovereign ratings, reflecting Fitch's expectations of an extremely high probability of government support in case of need. The Korean government is legally obliged to replenish any losses at KoFC should its capital reserve funds fail to cover them, as per Article 31 of the KoFC Act. KoFC's capital is and must be wholly owned by the government under Article 4.
One of the key policy financial institutions in South Korea, KoFC was established in October 2009 when it was spun off from Korea Development Bank ('A+'/Positive) as part of the latter's privatisation plan. It is 100%-owned by the government and is mandated to provide financial support to SMEs and new growth industries, and to promote stability in domestic financial markets without taking deposits.
Company — Korea Finance Corporation
Full nameKorea Finance Corporation
Registration countryRepublic of Korea