TEXT-S&P:Ratings on KOGAS affirmed; SACP revised to 'bb+'

Fri Dec 14, 2012 5:19am EST

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(The following statement was released by the rating agency)

Dec 14 -

Overview

-- KOGAS has stepped up overseas investment in LNG projects to meet a government-mandated target to increase the nation's owned supply to 25% by 2017.

-- We expect this increased investment to expand the debt in the company's capital structure, pressuring financial ratios for the company. We also believe increased exposure to the exploration and production sector weakens KOGAS' business risk profile owing to our view that there is higher inherent risk in this sector than in the company's core domestic business.

-- We remain of the view that potential extraordinary support from the government of the Republic of Korea in the event of financial stress would be "extremely high."

-- As a consequence, we revise our stand-alone credit profile for KOGAS to 'bb+' from 'bbb-'.

-- At the same time, we affirm our long-term and short-term corporate credit ratings on KOGAS at 'A+/A-1'.

Rating Action

Standard & Poor's Ratings Services affirmed its long-term and short-term corporate credit ratings on Korea Gas Corp. (KOGAS) at 'A+' and 'A-1'. At the same time, we revised the stand-alone credit profile (SACP) for KOGAS to 'bb+' from 'bbb-'. The outlook is stable.

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