(The following statement was released by the rating agency)
Dec 10 - Standard & Poor's Ratings Services today said that it has assigned its 'A+' senior
unsecured long-term foreign-currency rating to Korea Finance Corp.'s (KoFC;
A+/Stable/A-1) proposed senior unsecured samurai bonds. The rating is subject to final
documentation on the bonds.
The rating on the bonds reflects the rating on KoFC. Established on Oct. 28,
2009, KoFC is a spinoff from Korea Development Bank (KDB; foreign currency
A/Stable/A-1; local currency --/--/A-1). KoFC acts as a holding organization
for KDB Financial Group (KDBFG; not rated), which holds controlling stakes in
KDB, KDB Capital (not rated), KDB Asset Management Company (not rated), and
Daewoo Securities (not rated).
The ratings on KoFC are equalized with the ratings on Korea (foreign currency
A+/Stable/A-1; local currency AA-/Stable/A-1+), reflecting Standard & Poor's
opinion that there is an "almost certain" likelihood that the Korean
government would provide timely and sufficient extraordinary support to KoFC
in the event of financial distress. In accordance with our criteria for
government-related entities, our rating approach is based on our view of
KoFC's "critical" role as a primary public financial institution specialized
in public policy financial intermediation and "integral" link with its sole
owner, the Korean government.
The ratings incorporate strong direct support from the Korean government,
including capital injections, provision of direct lending, and guarantees. The
corporation is Korea's prime integrated public policy financial institution
and mandated to enhance the country's competitiveness and growth potential,
facilitate job creation, support high-tech startups, and support the soundness
of the financial system through its financial services.
In addition, the ratings reflect the government's legal obligation to maintain
the institution's solvency, based on the provision of article 31 of the KoFC
Act. Standard & Poor's, however, regards this statutory obligation as only a
sign of the government's commitment to support KoFC, rather than a direct
guarantee of timely payment for all the institution's obligations.
RELATED CRITERIA AND RESEARCH
Principles Of Credit Ratings, Feb. 16, 2011
Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010